What Is Nickel? Uses, Supply Chain & Critical Role

What is nickel? Nickel (Ni, atomic number 28) is a silvery-white transition metal that underpins stainless steel production, lithium-ion battery cathodes, and aerospace superalloys — making it one of the most commercially significant metals on the periodic table. Classified as a critical mineral by the United States, European Union, and United Kingdom, nickel faces growing scrutiny over supply concentration, ore-grade decline, and a market structure split between two distinct product classes.

What Is Nickel? Properties and Characteristics

Nickel is a hard, ductile, ferromagnetic metal — one of only four elements (alongside iron, cobalt, and gadolinium) that are magnetic at room temperature. Its Curie temperature is 355°C, above which it loses ferromagnetic properties. Nickel has a face-centred cubic crystal structure, a melting point of 1,455°C, and high resistance to corrosion through a self-forming oxide passivation layer.

These properties make nickel exceptionally well-suited to alloying. Pure nickel is rarely used in isolation; it is almost always combined with other metals to enhance strength, heat resistance, or corrosion performance at a lower cost than using premium base metals alone.

Key physical data: atomic mass 58.69 g/mol; density 8.908 g/cm³; electrical conductivity 14.3 × 10⁶ S/m. Nickel is not radioactive under standard conditions and is stable across the five naturally occurring isotopes, of which ⁵⁸Ni is the most abundant at 68% natural abundance.

Class 1 vs Class 2 Nickel — The Market Structure That Matters

Understanding what nickel is in a market context requires grasping the Class 1 / Class 2 distinction — a split that defines pricing, trading, and battery supply chain strategy.

Class 1 nickel is high-purity metal at or above 99.8% Ni. It is tradeable on the London Metal Exchange (LME) and is the benchmark for nickel futures pricing. Class 1 products include electrolytic nickel, nickel rounds, and carbonyl powder. Class 1 commands a premium and is the preferred feedstock for battery cathode precursors — particularly nickel sulphate used in NMC and NCA lithium-ion batteries.

Class 2 nickel covers all lower-purity products: ferronickel (FeNi), nickel pig iron (NPI), and nickel matte. These are not LME-deliverable but represent the majority of the world’s primary nickel output, particularly from Indonesia — now the dominant global producer. NPI and FeNi feed stainless steel directly. Conversion of Class 2 product to Class 1 nickel sulphate via high-pressure acid leach (HPAL) technology is commercially viable but capital-intensive.

The Class 1 premium over Class 2 fluctuates with battery demand and processing economics. Battery manufacturers require Class 1 feedstock; stainless steel mills do not. This bifurcation has driven investment in Indonesian HPAL projects seeking to bridge the gap.

What Is Nickel Used For?

Nickel’s primary applications by end-use, based on data from the International Nickel Study Group (INSG):

Stainless steel remains the dominant end use by volume. The 300-series austenitic grades — including the ubiquitous 304 and 316 — require 8–12% nickel content by weight. Stainless steel’s corrosion resistance in food processing, construction, oil and gas, and medical equipment derives directly from the nickel and chromium content of the alloy.

Lithium-ion batteries represent the fastest-growing demand category. NMC (nickel-manganese-cobalt) and NCA (nickel-cobalt-aluminium) cathode chemistries are progressing toward higher nickel content — NMC 811 contains 80% nickel in the cathode oxide — to increase energy density and reduce cobalt dependency. Each 60 kWh EV battery pack requires approximately 30–50 kg of nickel sulphate equivalent, depending on chemistry. See our nickel price tracker for current LME spot data and demand forecasts.

Superalloys are nickel’s premium application by value. Nickel-base superalloys — Inconel, Waspaloy, René alloys — maintain structural integrity above 1,000°C, making them essential for turbine blades, combustion chambers, and hot-section components in jet engines and industrial gas turbines. Defence and aerospace procurement drives significant demand for high-specification nickel superalloy products.

Where Is Nickel Produced?

Global nickel mine production reached approximately 3.7 million tonnes in 2024, with Indonesia accounting for the majority of new supply growth. The USGS estimates Indonesia produced 2.2 million tonnes in 2024, representing around 59% of world mine output — a structural shift driven by the build-out of NPI and HPAL processing capacity since 2018.

Sulfide deposits — concentrated in Canada, Russia, and Australia — produce higher-purity nickel more readily and co-produce platinum group metals (PGMs) and cobalt. Laterite deposits, which dominate Indonesia and the Philippines, are lower-grade and require energy-intensive processing but are lower-cost to mine. The global ore grade trend is downward: average mined grades have declined from above 2% Ni in the 1990s toward 1.0–1.3% today, increasing processing costs.

Russia’s Norilsk Nickel (Nornickel) remains the world’s largest producer of refined Class 1 nickel and palladium. Western sanctions risk from the Russia–Ukraine conflict introduced supply uncertainty into the Class 1 market after 2022, contributing to the LME short squeeze in March 2022 when prices briefly touched $100,000 per tonne before trading was suspended.

Nickel Price and Market

Nickel is priced on the London Metal Exchange as the primary global benchmark, with the LME cash price quoted in USD per tonne for Class 1 electrolytic nickel. The LME nickel market experienced its most extreme volatility in recent history in March 2022, when a short squeeze pushed prices to an intraday high of approximately $100,000/t — more than double the previous level — before the LME halted trading and cancelled trades, a decision that attracted widespread criticism and subsequent regulatory review.

By 2024, nickel prices had declined sharply from post-squeeze peaks, averaging approximately $15,328/t for the year — a 7.7% fall on 2023 — as Indonesian NPI supply continued to grow faster than battery demand could absorb. The surplus has pressured margins across the Class 1 supply chain and triggered project deferrals in higher-cost jurisdictions including Australia and Canada.

For current LME spot prices, monthly historical data, and price forecasts, see the nickel price page.

Nickel Supply Chain Risks

Nickel faces a set of structural supply risks that procurement professionals and investors track closely.

Indonesia concentration: One country producing nearly 60% of global mine supply creates single-point vulnerability. Indonesia’s government has actively managed its nickel sector through export bans on unprocessed ore (since 2020), domestic processing requirements, and selective investment approvals. Further policy shifts — including potential export taxes on processed products — remain a live risk. Recent disruptions illustrate the fragility: a sulfur supply shortage in early 2025 hit Indonesian HPAL operations, tightening Class 1 availability. See our coverage of the Indonesia nickel sulfur supply crisis for detail.

Russia supply risk: Nornickel accounts for a disproportionate share of global Class 1 refined nickel. Sanctions scenarios, logistics disruption, or contract terminations affecting Nornickel would reduce LME-deliverable supply materially. Western buyers have been reducing Russian nickel exposure since 2022, but full substitution requires either new Western Class 1 capacity or accelerated HPAL conversion in Indonesia.

China’s processing role: China controls a large share of nickel sulphate refining capacity and NMC precursor production. China’s position in battery materials processing — across nickel, cobalt, lithium, and graphite — is addressed in our guide to China’s critical minerals export controls.

Ore grade decline: Lower-grade laterite deposits require more energy and reagents per tonne of nickel recovered. HPAL capital costs are high and project timelines have repeatedly overrun. The economics of Western Class 1 production are under sustained pressure from low-cost Indonesian NPI.

Battery demand timing: EV adoption rates determine whether high-nickel cathode chemistry (NMC 811, NMC 9-half-half) scales fast enough to absorb new supply. Slower-than-expected EV penetration in key markets has contributed to the current price weakness.

This article is for informational purposes only and does not constitute investment advice.