As with all commodities, the Middle East conflict is hampering trade while the EU’s new carbon ‘tax’ for imports is expected to hit externally supplied products in H2.
The Middle East conflict is continuing to cause widespread disruption across the markets with the use of the Strait of Hormuz still broadly restricted. While oil prices (Brent crude & WTI) have since retreated below US$ 100 a barrel, a new supply shock is emerging due to a reduction in sulphur shipments.
This comes as China, the world’s largest sulphuric acid producer, halted exports from May, after introducing quotas earlier in the year. For nickel, Indonesia is very exposed because it imports three-quarters of its sulphur from the Middle East and is now competing for supplies with other commodities.
Figures from CRU show that nickel-related acid demand for use in battery in the country rose to 16 million tonnes per annum in 2025.
THREE-MONTH RISES
London Metal Exchange three-month nickel prices have surged in recent weeks as a result, climbing by more than US$ 2 000 per tonne since late March. They trended higher throughout April, climbing to US$ 19 450.
Prices peaked at a closing price of US$19 642 in early May, before correcting lower during the month. Prices have since remained rangebound between US$ 18 500-19 250 per tonne from mid-May into June.
Sucden Financial’s second-quarter report also highlighted this issue but noted the upside that nickel prices were capped as higher prices could result in additional RKAB mining approvals, thereby increasing supply onto the market.
‘In this context, price strength itself becomes a trigger for additional supply, limiting the sustainability of upward moves,’ it notes.
The reduction in Indonesian mining licences for this year has kept nickel prices well supported. Because of this, there are now expectations for the market to have moved from a surplus to a small deficit for 2026.
The report adds that demand growth remains insufficient to absorb supply on its own with stainless steel demand still uneven and batteries increasingly influenced by material substitution.
LME warehouse nickel stocks have recently reversed the upward trend seen from late last year onwards, with stocks closing at 276 444 tonnes at the end of May month, having decreased from 276 396 tonnes at April’s close and late March’s levels of 281 520 tonnes.
EU IMPROVEMENT
Meanwhile, in a new report, Joost van Kleef of Oryx Stainless and chairman of BIR’s stainless steel and special alloys committee, notes that first-quarter results by European stainless steel producers have shown clear improvement compared to last year, although they remain ‘below satisfactory levels’.
Van Kleef also highlights higher prices across a wide range of products in the stainless steel value chain, including raw materials such as ferro-chrome and ferro-nickel, as well as finished and semi-finished products such as cold rolled coils, since the introduction of the EU’s Carbon Border Adjustment Mechanism for ‘taxing’ carbon embedded in imported products.
With the upcoming revision to the safeguard measures, market expectations are now pointing towards significantly lower imports from 1 July, having already observed a fall in shipments during Q2. Van Kleef also notes that demand for stainless steel scrap was solid throughout the quarter but could slow into the summer.
Read our full market analysis nickel & stainless in our upcoming issue >>
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