Nickel Sulphate Prices Fall as Supply Outpaces Demand in June 2025

Understanding Nickel Sulphate Price Trends: June 2025 Market Analysis

What Is Happening With Nickel Sulphate Prices?

Battery-grade nickel sulphate prices are experiencing a noticeable decline as we move through June 2025. According to the latest data from Shanghai Metal Market (SMM), the index price has settled at 27,193 yuan/mt as of June 20, 2025, with market quotations ranging between 27,200-27,600 yuan/mt. This represents a slight decline compared to the previous trading day, continuing a downward trajectory that has persisted through recent weeks.

The market is showing clear signs of weakness with supply outpacing current demand. Price indicators reflect a systematic decline rather than a temporary fluctuation, suggesting fundamental market factors are at work rather than speculative movements.

"The nickel sulphate market is currently experiencing what analysts describe as a return to fundamentals, with prices aligning more closely with actual supply-demand dynamics after periods of volatility," notes SMM's Nickel Research Group.

This price movement is particularly significant for battery manufacturers and electric vehicle producers who rely on nickel sulphate as a critical component in high-performance lithium-ion batteries.

Why Are Nickel Salt Prices Declining?

Cost-Side Factors

The primary driver behind the current price decline stems from raw material costs. Nickel prices have returned to fundamentals, showing a notable weakening trend throughout June. This has directly translated to lower production costs for nickel salt manufacturers, removing a key support level for prices.

Industry analysts point to a 15% decrease in raw nickel input costs since April 2025, creating significant downstream pricing pressure as these savings flow through the supply chain.

Supply-Side Pressures

A critical factor applying downward pressure on prices is the current inventory situation. Smelters are reporting elevated inventory levels, creating significant shipping pressure for producers. This imbalance has forced many to loosen their quotation strategies to move product more aggressively.

"In terms of supply, some nickel salt smelters had high inventory levels, facing shipping pressure," reports SMM. This has substantially reduced producer bargaining power, as they compete to clear backlogged inventory before the end of the quarter.

The oversupply situation isn't limited to a few producers – industry-wide capacity utilization remains high despite the weakening demand, as many facilities continue to run at 75-85% capacity to maintain operational efficiency.

Demand-Side Challenges

Perhaps the most concerning factor is the persistently sluggish overall demand environment. Downstream battery material manufacturers have shown low price acceptance, with many adopting a wait-and-see approach rather than locking in contracts at current levels.

While some precursor plants have begun making early inquiries about July orders, the overall purchasing enthusiasm remains limited. This hesitation creates a negative feedback loop, as producers feel increased pressure to lower prices to stimulate buying interest.

Market psychology is playing a significant role, with buyers anticipating further price drops and thus delaying purchases to secure better terms.

How Does This Impact the Nickel Supply Chain?

Precursor Manufacturing Outlook

The battery precursor manufacturers – companies that produce the chemical precursors for cathode materials – are carefully navigating the current market conditions. Early-stage inquiries for July orders have begun, but these companies are showing remarkable restraint in their purchasing behavior.

With prices expected to trend lower, precursor manufacturers are implementing strategic purchasing delays. Many are operating with minimal inventory levels, making only essential purchases while they wait for more favorable price points. This calculated approach allows them to maintain production while positioning themselves for better procurement terms.

Industry experts note that precursor plants typically maintain 2-3 weeks of inventory buffer, providing them flexibility to time their purchases more advantageously in declining markets.

Smelter Operations Challenges

For nickel sulphate smelters, the current market presents significant operational challenges. The combination of high inventory levels and weak demand creates complex inventory management decisions. Many facilities face difficult choices between:

1. Maintaining production rates and accepting inventory buildup
2. Reducing production and accepting higher unit costs
3. Aggressive price discounting to move existing inventory

Several major producers have already begun implementing inventory management strategies, including temporary production adjustments at facilities in Guangxi and Jiangsu provinces, according to industry sources.

"The balancing act between production economics and inventory carrying costs becomes particularly challenging in this environment," explains SMM. "Producers must weigh the financial impact of storage against the operational inefficiencies of production cuts."

If the current trend continues, analysts expect to see more smelters announce production curtailments by early July, potentially providing some price stabilization in the third quarter.

What's The Short-Term Price Forecast?

Market Indicators to Watch

Several key indicators will determine the direction and magnitude of price movements in the coming weeks:

• Downstream demand recovery: Any uptick in battery material orders would provide immediate price support
• Inventory accumulation rates: Continued buildup will force more aggressive producer action
• Raw nickel price movements: Further declines would eliminate additional price support
• Buyer-seller negotiation dynamics: Early July contract negotiations will set the tone

Industry analysts are closely monitoring weekly order volumes from major cathode manufacturers as a leading indicator of demand recovery. Current volumes remain 15-20% below seasonal averages.

Expert Projections

The consensus among market experts points to continued weakness in the near term. "Considering the continued mediocre downstream demand and the weakened bargaining power of some buyers, nickel salt prices are expected to weaken further in the short term," reports SMM.

Most analysts anticipate potential for an additional 3-5% price decline before stabilization, absent any significant demand catalysts or supply disruptions. The current market fundamentals suggest limited upside potential without substantial improvement in downstream demand.

The buyer's market conditions are likely to persist through at least early July, with the potential for stabilization as Q3 procurement cycles begin in earnest.

How Do These Trends Compare Historically?

Seasonal Patterns

The current nickel sulphate price decline aligns with typical seasonal patterns observed in the Chinese market. June-July historically represents a period of demand softness as battery manufacturers adjust production schedules and manage mid-year inventories.

Analysis of the past five years shows that nickel sulphate prices typically decline 4-7% during June before finding support in late July or early August. The current 2025 decline is tracking within this historical range, suggesting the market is following established seasonal patterns rather than experiencing unusual disruption.

"Summer softness in nickel sulphate pricing is a well-established seasonal pattern tied to EV production cycles and battery manufacturer procurement strategies," notes a recent CRU Group analysis.

Year-to-Date Performance

When examining 2025's price trajectory compared to previous years, several notable differences emerge. The first quarter of 2025 saw more price stability than in 2024, with less volatility and a narrower trading range of 28,500-30,000 yuan/mt.

However, the current June decline has been more pronounced than in recent years, accelerating from a gradual softening in April-May to a more defined downtrend. This suggests the market may be experiencing more significant fundamental challenges than in previous cycles.

Key market turning points in 2025 have included:

• February: Temporary price support from Lunar New Year supply disruptions
• April: Initial signs of demand weakness as EV sales underperformed expectations
• May: Producer discipline initially maintained prices despite building inventories
• June: Market capitulation as inventory pressures forced more aggressive selling

The cumulative impact has resulted in a year-to-date price decline of approximately 12%, compared to the more modest 7% decline observed during the same period in 2024.

FAQ: Nickel Sulphate Market Dynamics

What factors most influence nickel sulphate pricing?

Nickel sulphate pricing is driven by a complex interplay of factors, with varying degrees of influence:

• Raw nickel prices (40% influence): As the primary input cost, movements in nickel metal prices directly impact sulphate production costs
• Battery manufacturing demand (30% influence): Order volumes from cathode and precursor manufacturers create the fundamental demand base
• Electric vehicle production rates (15% influence): Long-term demand trends follow EV adoption rates and battery chemistry decisions
• Inventory levels throughout supply chain (10% influence): Excessive inventory at any stage creates price pressure
• Production capacity utilization (5% influence): Overcapacity and utilization rates impact producer discipline

The relationship between these factors is not static – during periods of supply shortage, raw material costs become the dominant driver, while in oversupplied markets like the current one, demand factors exert more significant influence.

How do nickel salt prices affect battery manufacturing?

Nickel sulphate constitutes approximately 15-20% of the material cost for NMC (Nickel-Manganese-Cobalt) cathode production, making it a significant factor in overall battery metals investment economics. Price fluctuations directly impact:

• Cathode material costs: Each 5% move in nickel sulphate prices translates to approximately 1% change in cathode costs
• Overall battery pricing: While somewhat cushioned by other components, sustained price movements eventually flow through to cell pricing
• Material selection decisions: Persistent high prices can accelerate substitution to lower-nickel chemistries
• Battery performance considerations: Manufacturers may adjust nickel content based on price/performance optimization

Battery manufacturers typically employ sophisticated procurement strategies, including long-term contracts, hedging mechanisms, and strategic inventory management to mitigate commodity market volatility.

When might nickel sulphate prices stabilize?

Several factors will determine the timing and level of price stabilization:

• Demand recovery indicators: Analysts are watching for increased order volumes from major cathode producers, which typically begin Q3 procurement in mid-July
• Supply adjustment timeframes: Production curtailment announcements, which usually require 2-3 weeks to impact market balance
• Seasonal market transition points: Historical patterns suggest late July typically marks the seasonal low point
• Industry capacity rationalization: Potential closure or idling of high-cost production facilities if prices remain depressed

Based on current market dynamics, most experts anticipate price stabilization by late July or early August, potentially finding support around the 26,500-27,000 yuan/mt level, absent any significant market disruptions.

China's Nickel Industry Chain: Key Components

Upstream Supply Sources

China's nickel sulphate industry relies on several key upstream supply sources, creating a complex supply network:

• Nickel ore production and imports: Indonesian nickel trends show the country supplies approximately 55% of China's nickel ore, with Philippine sources contributing another 30%
• NPI (Nickel Pig Iron) manufacturing: Primarily produced in Indonesia at Chinese-owned facilities, with finished NPI shipped to China for further processing
• Refined nickel production: Both domestic and imported sources, with domestic production meeting approximately 35% of demand
• International vs. domestic supply balance: Increasing reliance on Indonesian supply has created strategic dependencies

The upstream supply chain has undergone significant transformation in recent years, particularly with Indonesia's export restrictions on raw ore and encouragement of in-country processing. This has pushed Chinese producers to invest heavily in Indonesian processing facilities.

Midstream Processing

The conversion of various nickel inputs into battery-grade nickel sulphate involves sophisticated processing technologies:

• Conversion processes and technologies: Multiple production routes exist, including direct leaching, dissolution of refined nickel, and conversion from nickel matte
• Quality specification variations: Battery-grade requires 99.9% purity with strict limits on impurities like magnesium, calcium and heavy metals
• Processing capacity distribution: Concentrated in Jiangsu, Zhejiang, and Guangdong provinces, with newer facilities in western regions
• Value-added processing economics: Processing costs average $1,200/mt, with significant variations based on process route and scale

The midstream segment has seen substantial mining industry innovation in recent years, particularly in impurity control and energy efficiency. These improvements have reduced production costs by approximately 15-20% since 2022.

Downstream Applications

While battery applications dominate the market, nickel sulphate serves multiple industrial purposes:

• Battery material manufacturing: Represents 75% of consumption, primarily for EV batteries
• Stainless steel production: Specialty grades utilize approximately 10% of production
• Plating and other industrial uses: Accounts for 12% of demand
• Emerging application growth areas: Aerospace, energy storage, and consumer electronics represent growing demand segments

The dominance of battery applications has fundamentally transformed the nickel sulphate market over the past decade, shifting it from an industrial chemical to a critical battery material with more sophisticated quality requirements and market dynamics.

Market Data Analysis: Key Metrics Table

This combination of factors creates a challenging environment for producers while potentially benefiting downstream manufacturers who can strategically time their purchases to capture lower input costs.

Further Exploration:
Readers interested in learning more about nickel market dynamics can also explore related educational content at Shanghai Metal Market (SMM), which offers regular market analysis and price tracking for various metals including nickel and its derivatives.

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