Nickel prices have underperformed this year, making it the weakest among major base metals, even lagging behind zinc. As of now, Nickel has gained only about 1% year-to-date, according to Thu Lan Nguyen, Head of FX and Commodity Research at Commerzbank.
Nickel: Supply Surplus Continues to Weigh on Prices
Recent forecasts from the International Nickel Study Group (INSG) reinforce the bearish sentiment in the Nickel market. Despite Indonesia’s efforts to tighten regulations on domestic production, global output is expected to grow by 8% this year and another 7% in 2026. In contrast, demand growth is expected to be slower, at 5% this year and 6% next year. As a result, the supply surplus is projected to increase, keeping downward pressure on prices.
Copper: Tightening Supply Could Support Higher Prices
Meanwhile, the outlook for copper supply has shifted significantly. Earlier this year, the International Copper Study Group (ICSG) forecast a surplus of nearly 300,000 tons. However, they have since cut that estimate to 178,000 tons for 2025 and now predict a supply deficit of 150,000 tons in 2026. This revision is due to a notable slowdown in production growth—down to just under 1% next year from 3.4% this year.
The rapid shift in copper’s supply outlook has contributed to recent price increases, though Commerzbank notes that current supply conditions still appear relatively comfortable, and recent price gains may be overdone.
Volatility Risks Remain for Both Metals
Copper’s recent shift highlights how quickly supply dynamics can change due to unexpected disruptions. Nickel, with Indonesia accounting for about 60% of global mine output, remains particularly vulnerable to regulatory changes. While the near-term supply outlook for Nickel is favorable, potential policy shifts in Indonesia could lead to sharp price swings, and this risk should not be overlooked.