Material Insights · Understanding the Material World

Nickel and Steel

Stainless steel takes about two-thirds of the world's nickel, so stainless output in China and Indonesia sets nickel demand, while carbon steel, most of all steel, uses almost none and its price barely tracks nickel.

Nickel (commodity) and Steel (commodity): 5 relationships.

How they are linked

1. Stainless steel's key alloy

Physical flow · Strong · Nickel to stainless steel

Nickel stabilises the austenitic structure that makes the common stainless grades formable, tough and corrosion resistant, so most stainless steel contains it.

  • just under 70% of world nickel consumption in stainless steel
  • 8% nickel in Type 304 stainless
  • 11% nickel in Type 316 stainless

Nickel-containing grades make up roughly three-quarters or more of stainless production. Low-nickel, duplex and high-chromium stainless grades can replace some austenitic grades, which caps demand when nickel is dear. In the US, stainless and alloy steels and nickel alloys take more than 85% of nickel consumption.

Sources: Nickel Institute; International Nickel Study Group (via Stainless Steel World); USGS

2. Price link: main use

Cost and price · Weak · Both ways

Stainless mills drive nickel demand, but the steel series compared is a US index for all steel mill products, mostly carbon steel that uses no nickel, so the two prices hardly move together month to month.

  • 0.04 monthly change correlation
  • 0.31 12-month change correlation
  • 0.36 fitted elasticity

A weak monthly correlation of 0.04 rising to 0.31 over twelve months reflects a shared industrial cycle rather than a cost link. Stainless steel prices follow nickel far more closely than the broad steel index does.

Sources: Material Insights (World Bank, FRED, IMF data)

3. Indonesian nickel and stainless complexes

Geography and ownership · Strong · The same groups make nickel and stainless

Indonesia now mines most of the world's nickel, and groups such as Tsingshan make both nickel products and stainless steel, so nickel supply and stainless output expand in the same places and firms.

  • 66% Indonesia's share of world nickel output, 2025
  • 2.05 Mt combined Chinese and Indonesian nickel pig iron output, 2025 forecast

Indonesian mine output was about 2.6 Mt of a world 3.9 Mt in 2025. Most of the world's nickel pig iron, a low-grade nickel product, is made in China and Indonesia, and USGS reports that the primary nickel market has been in surplus since 2022 as Indonesian supply grew.

Sources: International Nickel Study Group (via Stainless Steel World); USGS; S&P Global Commodity Insights

4. Nickel price shocks

Cost and price · Asymmetric · Nickel price spikes raise stainless costs

With 8 to 11% nickel in the main austenitic grades, nickel is a large part of their metal cost, so nickel price shocks pass into stainless prices while carbon steel is unaffected.

  • $101,365/t LME three-month nickel peak, 8 March 2022
  • up to 70% nickel price rise on 7 March 2022

In March 2022 a short squeeze centred on Tsingshan, the world's leading stainless steel and nickel producer, drove LME nickel above $100,000 per tonne and the exchange suspended trading. Prices have since fallen: the LME price ended October 2025 at about $15,055 per tonne amid surpluses.

Sources: International Nickel Study Group (via Stainless Steel World); S&P Global Commodity Insights; S&P Global Commodity Insights

5. Recycled through stainless scrap

Physical flow · Medium · Stainless scrap returns nickel to new steel

Most secondary nickel is recovered from stainless steel scrap and goes back into new stainless and alloys, so the scrap supply competes with primary nickel.

  • about 60% of US apparent nickel consumption supplied by scrap, 2025

High scrap use makes the US and other mature markets less dependent on primary nickel than their consumption suggests. In fast-growing markets with little old stainless in use, primary nickel and pig iron fill most of the need.

Sources: USGS

For investors

Key learnings

  1. Stainless steel takes just under 70% of world nickel, so stainless melt rates in China and Indonesia are the main demand signal.
  2. Indonesia's integrated nickel and stainless complexes, with 66% of world nickel output in 2025, have made the market one of persistent surplus.
  3. Nickel shocks hit stainless costs but not carbon steel, which is why the broad steel price index shows almost no correlation with nickel (0.04).

What to track

  • Stainless steel melt shop output: Higher output lifts nickel demand (Quarterly · worldstainless)
  • LME nickel price and stocks: Moves pass into stainless alloy surcharges (Daily · LME)
  • Indonesian nickel pig iron output and ore quota policy: Quota cuts or new plants shift nickel supply and stainless costs (Monthly · INSG, Indonesian energy and mineral ministry)

For policymakers

Key learnings

  1. Indonesia's rise to 66% of world nickel output, led by firms that also make stainless steel, means a nickel importer's stainless industry competes with its own supplier.
  2. Stainless makers that import nickel units are exposed to price shocks like the 2022 LME squeeze, so supply contracts and stocks matter.
  3. Collecting and sorting stainless scrap, which supplies about 60% of US nickel use, reduces import needs.

What to track

  • Imports of nickel, ferronickel and pig iron by source: Shows dependence on Indonesia for stainless inputs (Monthly · Commerce ministry TradeStat)
  • Stainless steel output and imports: Rising imports from Indonesia and China pressure domestic mills (Monthly · Joint Plant Committee, Ministry of Steel)

India

India does not appear among the nickel producers USGS lists, so its stainless steel industry imports nickel units and competes with low-cost stainless from Indonesia's integrated nickel and steel complexes.

Sources

  1. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  2. Stainless steel, Nickel Institute (2025)
  3. The world nickel market in 2025 and 2026: five years of surpluses, International Nickel Study Group (via Stainless Steel World) (2026)
  4. Mineral Commodity Summaries 2026: Nickel, USGS (2026)
  5. LME suspends nickel trading after unprecedented surge to above $100,000/mt, S&P Global Commodity Insights (2022)
  6. China's Tsingshan enters deal with bankers to resolve nickel trade position, S&P Global Commodity Insights (2022)