Nickel Market Shows Signs of Recovery Amid Chinese Policy Shifts & Supply Constraints

• Nickel prices remain range-bound at $15,000-$15,800 since April, testing lower levels but showing resilience despite Chinese attempts to suppress ore prices, with Philippine supply constraints approaching due to rainy season.
• Chinese market indicators turning positive with the composite stock index reaching 10-year highs and up 35% year-over-year, signaling improved liquidity and sentiment as the government focuses on eliminating excess industrial capacity.
• Electric vehicle demand remains robust globally with July sales up 21% monthly and 27% year-to-date, while nickel deployment in EV batteries increased 8% year-over-year despite regional variations in growth rates.
• Government support for critical minerals intensifying with the largest Canadian trade mission to date and high-level U.S. meetings between mining executives and the White House, indicating policy momentum for domestic mineral development.
• Junior mining companies showing operational progress across multiple projects, with several securing financing and reporting positive drilling results, suggesting improved market conditions for exploration activities.

The nickel market continues to navigate a challenging but potentially transitional period, with prices maintaining a relatively narrow trading range of $15,000 to $15,800 per tonne since April 2025. According to Canada Nickel CEO Mark Selby's analysis, the market is currently testing the lower end of this range while showing notable resilience against downward pressure from Chinese market participants.

Chinese Market Influence and Policy Shifts

A significant development in the global nickel landscape is the evolving Chinese approach to industrial capacity management. The Chinese government has shifted focus toward eliminating deflationary pressures and excess capacity across multiple industries, moving away from previous strategies that prioritized cheap production at the expense of profitability. This policy realignment appears to be having tangible effects on nickel-related products, with both nickel pig iron (NPI) and stainless steel prices moving higher for the fourth or fifth consecutive week.

The Chinese market sentiment is further reflected in a key economic indicator that Selby highlighted from his experience during the 2008 financial crisis. A Chinese billionaire's investment philosophy centered on monitoring the Chinese composite stock index as the primary gauge of economic health and liquidity flows. Currently, this index has reached 10-year highs and gained over 30% in the past year, suggesting improved market confidence and increased capital circulation within the Chinese economy.

Supply Chain Considerations

Despite analyst reports indicating massive surpluses in London Metal Exchange and Shanghai Futures Exchange inventories, actual inventory accumulation has been modest, increasing by only 1,500 tonnes weekly. This discrepancy between projected surpluses and actual inventory levels suggests either demand strength or supply constraints that may not be fully captured in traditional analysis.

The approaching Philippine rainy season presents a significant supply consideration, as approximately half of Philippine ore production typically becomes unavailable during this period. With only about 60 days remaining before this seasonal constraint takes effect, the timing could create supply tightness that supports price stability or potential increases.

Electric Vehicle Market Performance

Global electric vehicle sales continue to demonstrate strong momentum, with July 2025 reporting a 21% year-over-year increase and 27% growth year-to-date. This performance contradicts earlier concerns about European market weakness, which Selby attributes to policy-driven demand timing rather than fundamental market deterioration. European sales of both battery electric vehicles and plug-in hybrids have increased by over 30%, indicating robust underlying demand once policy effects are normalized.

The U.S. market presents a more complex picture, with year-over-year growth of only 2%. However, this weakness is expected to be temporary, as the expiration of certain Biden administration subsidies in the fall is anticipated to drive accelerated purchases before the incentives disappear.

From a nickel demand perspective, the deployment of nickel in EV batteries for cars sold in June 2025 increased 8% year-over-year. While this growth rate may appear modest, it aligns with the industry's trajectory toward meeting projected demand of five to six million tonnes of nickel annually by 2030. The continued shift toward lithium iron phosphate (LFP) batteries, which contain no nickel, means that maintaining high single-digit growth rates in nickel-containing battery applications represents solid fundamental demand.

Mark Selby, CEO fo Canada Nickel Corp & Market Commentator

Government Policy and Critical Minerals Focus

Government attention to critical minerals has intensified significantly, with concrete actions demonstrating policy commitment beyond rhetorical support. The Canadian government is hosting what appears to be the largest trade mission for critical minerals companies to date, indicating institutional recognition of the sector's strategic importance.

In the United States, unprecedented high-level engagement occurred with mining executives from BHP and Rio Tinto meeting at the White House to discuss the Resolution Copper project and strategies to overcome legal obstacles. Selby noted the historical rarity of such direct presidential engagement with mining companies, characterizing it as a clear indicator of government seriousness about critical minerals development.

These policy developments suggest that the long-anticipated government funding and support for critical minerals projects may finally materialize in the coming months, representing what Selby describes as "the real pivot point" that the industry has awaited for three to four years.

Company-Specific Developments

Exploration and Development Progress

Several junior mining companies have achieved notable milestones across different project stages. Homeland Exploration, formerly Spruce Ridge Resources, secured surface exploration permits for its Oregon nickel laterite properties. This development is particularly significant as Oregon represents one of the few domestic U.S. locations with historical nickel production, having operated the Riddle nickel smelter for approximately 40 years during the Cold War era to ensure domestic nickel supply security.

LifeZone Metals obtained a $60 million bridge facility from Taurus, a private equity group specializing in mining project development through to production. This financing enables continued advancement of the Kabanga nickel project, representing successful capital access in what remains a challenging funding environment for mining development.

Drilling Results and Resource Expansion

Talon Metals reported encouraging drilling results representing a 25-meter step-out from previously announced high-grade intersections. While assay results remain pending, the mineralized intervals suggest potential continuity of the deposit, supported by published geophysical data indicating additional targets for exploration.

NexMetals, formerly Premium Nickel Resources, has been rebranded and repositioned around its Botswana project, which primarily targets copper with nickel byproducts. Recent drilling has extended mineralization over 300 meters down-plunge with copper grades around 3% and associated nickel credits. The project's success will largely depend on mineral processing capabilities and the ability to produce commercially viable nickel concentrates.

Magna Mining reported multiple infill holes at its Levack project within the Sudbury mining district, generating multi-percent nickel grades with copper byproducts consistent with historical Sudbury production. These results support the company's near-term mining plans for specific deposit areas.

First Atlantic Nickel continues to expand the Awaruite deposit in Newfoundland through step-out drilling, achieving Davis Tube Recoverable (DTR) nickel grades of 0.11-0.12% with overall nickel grades of 0.22-0.24%. While these grades are below the typical 0.2-0.3% range for this deposit type, they represent solid results for the geological setting and deposit style.

Capital Markets and Investment Environment

The financing environment for mining companies shows signs of gradual improvement, though conditions remain challenging compared to historical periods of robust commodity cycles. Selby noted that companies with quality projects have been able to access capital, representing a modest opening of financing windows that had been largely closed.

The sustained elevation of gold prices above $3,300 per ounce has not yet generated significant spillover effects into exploration-stage companies, but Selby anticipates that continued strength at these levels will eventually drive investor interest down the risk spectrum toward earlier-stage mining opportunities.

Key Takeaways and Market Implications

The nickel market appears to be approaching a potential inflection point driven by multiple converging factors. Chinese policy shifts toward capacity rationalization are beginning to affect stainless steel and NPI pricing, while supply constraints from the approaching Philippine rainy season could provide additional support. Government commitment to critical minerals development in major economies suggests that policy support may finally translate into concrete funding and regulatory assistance.

The electric vehicle market's continued growth, despite regional variations, provides fundamental demand support for nickel, particularly in higher-grade battery applications. While financing conditions remain challenging for junior mining companies, those with quality projects and strategic positioning are successfully accessing capital and advancing their development programs.

The combination of improving Chinese economic indicators, sustained EV demand growth, emerging government support, and seasonal supply constraints suggests that the prolonged period of range-bound nickel trading may give way to more dynamic price action in the coming months. For investors, the current environment presents opportunities in well-positioned companies that can benefit from both improving market fundamentals and increased government support for critical minerals development.