Nickel prices outlook for 2H’26, according to Bernstein

Bernstein raised its 2026 nickel price target to $17,357/ton (from $15,164 average in 2025), citing a shift to only a small surplus versus earlier expectations of >200,000 tons. The adjustment is driven by Indonesia tightening ore availability and raising costs (C1 cash costs now $17,870/ton at the 75th percentile and $18,650 at the 90th). Separately, the Iran–US/Israel conflict has tightened sulphuric acid for HPAL, pushing granular sulphuric acid prices from <$600/ton to ~ $1,000 and leading to Indonesian HPAL production cuts, while EV demand remains soft (global EV sales +0.5% y/y through April; BEVs +5.1%, PHEVs -8.5%).

Analysis

The tradable signal is a higher marginal-cost floor, not a clean bull case for nickel. Indonesian policy risk and sulfuric-acid tightness lift breakevens for HPAL/greenfield supply, which helps low-cost integrated producers and punishes projects that were underwritten to a much cheaper reagent regime. But the market still has a large inventory overhang relative to annual mine supply, so any price spike is likely to be sold until stocks start drawing on a sustained basis.

Second-order, the demand mix is getting less nickel-intensive even if headline EV volumes recover. LFP dominance and emerging sodium-ion pathways reduce the long-run elasticity of nickel demand to EV unit growth, while stainless steel remains the only durable demand anchor. That makes this a cyclical cost-curve story rather than a new supercycle: higher prices can shut in marginal supply, but they do not fix the fact that end-demand is not accelerating fast enough to absorb visible stocks quickly.

Near term, the main reversal catalysts are policy and chemistry: a larger-than-feared Indonesian RKAB release or normalization in sulfuric acid availability would unwind the scarcity premium within weeks to months. Over 6-18 months, the bigger risk to bullish nickel positioning is that the market keeps paying for supply fear while the structural demand mix shifts away from nickel in batteries. The consensus may be overpricing Indonesian tightness and underpricing how little incremental EV demand now maps to nickel consumption.

Best asymmetric outcome is for low-cost diversified miners with nickel optionality and for non-nickel battery chemistries; the clean losers are high-cost nickel names and HPAL-linked supply chains. I would treat this as a fade-the-rally commodity setup unless LME/SHFE inventories begin to draw materially and stainless demand surprises to the upside.

Key Decisions for Investors

• Short nickel beta on rallies: use NIKL or JJN as a tactical short into any price spike, with a 1-3 month target tied to quota-normalization headlines; risk/reward improves if LME nickel fails to hold above recent resistance while inventories stay elevated.
• Pair trade: long BHP / short SMNEY to isolate the policy-cost-curve effect. BHP has diversified earnings and nickel optionality; SMNEY is more exposed to nickel downside if Indonesian supply loosens or acid costs normalize.
• Do not chase a structural long in nickel producers until there is evidence of inventory draw. Falsifier for the short thesis: combined LME/SHFE stocks fall for 6-8 consecutive weeks or stainless PMI improves enough to tighten spot premiums.
• Watch, not trade: LIT and non-nickel battery winners if sodium-ion/LFP adoption keeps taking share. This is a 6-18 month displacement theme, but current valuation and broad EV softness make it better as an alert than an immediate equity long.