Nickel Market Shows Strong Recovery Amid Global Supply Shifts

• Nickel prices have recovered to around $16,500 per tonne ($7.50/lb), representing a 10% gain since the start of the year, driven by significant increases in Indonesian and Philippine ore prices.
• The Indonesian ore price, which increased by $1.50-$2 per tonne (3-6%) this week, is considered the key indicator to watch for the nickel market's direction in 2025.
• Canada Nickel Company announced the creation of a RoyaltyCo holding a 1% royalty on most of its land package, allowing them to raise $8 million while retaining 62% ownership.
• Recent developments in the sector include Centaurus receiving a construction permit for their Brazilian nickel project and positive drilling results from EV Nickel and First Atlantic Nickel.
• The London Metal Exchange was fined £9.2 million ($11.9 million) by UK regulators for its handling of the 2022 nickel trading crisis, which resulted in $12 billion in canceled trades.

Nickel's position as a critical mineral continues to strengthen amid global supply chain restructuring and an increased focus on secure, sustainable sources of essential metals. The recent market dynamics, coupled with geopolitical shifts and industrial demand patterns, have created a potentially favorable environment for investors considering exposure to this strategic metal. Mark Selby, CEO of Canada Nickel, provides insights into current market trends, pricing movements, and developments within the sector that could influence investment decisions.

Market Pricing Dynamics Show Strengthening Fundamentals

The nickel market has demonstrated resilience in early 2025, with prices reaching approximately $16,500 per tonne ($7.50 per pound), representing a 10% gain since the beginning of the year. While there was a brief retracement following a sharp upward move, prices have subsequently recovered, indicating underlying strength in the market.

The most significant factor driving this price movement appears to be developments in ore pricing from key producing regions. Indonesian ore prices experienced a notable increase of $1.50-$2.00 per tonne across different grades, translating to a 3-6% increase. Similarly, Philippine ore prices have moved significantly higher over the past two weeks as the rainy season concludes, suggesting tighter supply conditions than market participants had anticipated.

"The big thing underpinning this whole move is we've seen another big move in ore prices in Indonesia and in Philippines last week. The ore price increase is translating into the whole ore price, NPI price, stainless steel price. So we're seeing higher prices throughout the chain."

What's particularly noteworthy is that several price points along the supply chain are trading at levels only briefly reached in September/October 2024, despite the overall nickel price being lower than during that period. This divergence suggests improved fundamentals supporting current prices rather than speculative activity.

Government Policies Enhancing Critical Minerals Investment Climate

Recent governmental policy shifts in North America appear to be creating a more supportive environment for critical minerals projects, particularly in Canada. The implementation of tariffs by the United States has prompted Canadian provincial and federal authorities to accelerate support for domestic critical minerals development.

The Ontario government recently announced a $500 million fund for critical minerals processing, which is expected to benefit advanced projects like those in the Timmins Nickel District. With relatively few projects at an advanced stage of development, well-positioned companies stand to receive substantial government backing.

"For us in Canada and in the critical mineral space, Trump is actually the best thing to come along. We've seen a bunch of government programs announced and again we expect to see a bunch of government money come down the pipe."

The upcoming Canadian federal election could further strengthen this trend, with both major parties emphasizing critical minerals development. Mark Carney, leading the Liberal Party, has repeatedly stressed the importance of "pace" in building a new economy less dependent on the United States, while the Conservative Party has also highlighted expediting permits for mining projects.

North American Projects Advancing Amid Global Supply Concerns

Several North American nickel projects are making progress, potentially creating investment opportunities as the market continues to seek diversification away from concentrated supply sources:

Canada Nickel Company announced the creation of a RoyaltyCo holding a 1% net smelter royalty (NSR) on most of its land package outside the flagship Crawford project. This structure enables the company to raise $8 million while maintaining 62% ownership, providing financing flexibility without diluting their core asset. The company expects to publish six additional resource estimates by mid-year, potentially creating a resource endowment that "starts to approach the Sudbury basin on its own," according to Selby.

EV Nickel, operating in the Timmins Nickel District, reported results from six drill holes at its Gemini North target, with five holes showing typical dunite grades around 0.25% nickel. However, one hole demonstrated 280 meters of mineralization at 0.32% nickel, with some intervals exceeding 1% nickel, suggesting potential for higher-grade zones within the broader deposit.

First Atlantic Nickel reported assays from their Newfoundland project with 216 meters averaging 0.25% nickel, which is consistent with other large-scale nickel deposits of this type. The company has also partnered with the Colorado School of Mines to investigate natural hydrogen potential associated with the serpentinization process that creates these ultramafic-hosted nickel deposits.

Internationally, Centaurus received a construction permit for their Brazilian nickel project, marking it as "one of a handful of projects that could start up before the end of the decade," according to Selby. This development represents a significant milestone, though financing arrangements still need to be finalized.

The Battery Show, with Mark Selby

Lessons from Market Structure & Regulatory Oversight

The London Metal Exchange (LME) nickel trading crisis of March 2022 provides important context for investors considering the nickel market. The UK's Financial Conduct Authority recently imposed a £9.2 million ($11.9 million) fine on the LME for its handling of the situation, which resulted in approximately $12 billion in canceled trades when prices spiked to nearly $100,000 per tonne.

The regulatory investigation revealed that only junior staff were on duty during the early morning hours when the market was experiencing extreme volatility, highlighting potential structural vulnerabilities in the primary pricing mechanism for an essential industrial metal. This relatively modest fine (representing approximately 0.1% of the value of canceled trades) raises questions about the effectiveness of market oversight and the potential for similar disruptions in the future.

For investors, this underscores the importance of understanding the mechanics of commodity pricing and being aware of the potential for extraordinary volatility in markets where liquidity can rapidly disappear during periods of stress.

Investment Considerations: Tariffs, Supply Chains, and Regional Advantages

The implementation of tariffs by the United States creates complex dynamics for nickel market participants but may ultimately benefit North American projects. Even with tariffs in place, Selby notes that selling steel into the US market would currently generate higher returns than in October 2024, prior to the tariff implementation, due to price adjustments and additional costs associated with alternative supply sources.

"If we were producing steel today and selling and the only place we could sell steel was into the US, we would be receiving a higher net back today paying the tariff than we would have in October.” 

This situation arises because US steel companies have increased their prices to account for the tariffs and additional freight and financing costs associated with non-North American supply.

For companies with the flexibility to sell into multiple markets, opportunities exist regardless of trade tensions. 

"We can sell our products into the US and Europe. If the US doesn't want them, we can send everything we can make to Europe without any problems at all."

This flexibility, combined with the growing emphasis on secure supply chains and environmental considerations, creates potential advantages for projects in stable jurisdictions with lower carbon footprints. While environmental considerations may have diminished somewhat in investor priorities compared to 18-24 months ago, they remain relevant factors in the overall investment thesis.

A Shifting Landscape for Nickel Investment

The nickel market is experiencing a period of transformation driven by geopolitical realignments, supply chain restructuring, and evolving industrial demand patterns. Current pricing trends suggest strengthening fundamentals, particularly in the ore market, which has historically been a leading indicator for the broader nickel price environment.

Government initiatives to support critical minerals development in North America present potential catalysts for well-positioned projects, while supply constraints in traditional producing regions may provide underlying support for prices. The advancement of multiple nickel projects outside of Indonesia demonstrates the industry's response to concerns about concentrated supply sources.

For investors considering exposure to nickel, understanding these dynamics—alongside the technical and financial aspects of individual projects—provides essential context for evaluating opportunities in this strategically important metal. While challenges remain, including potential market structure vulnerabilities highlighted by the LME crisis, the fundamental drivers for nickel demand appear intact, supported by both traditional industrial applications and emerging technological requirements.