Nickel, Manganese and the 2026 Battery Metals Outlook: Indonesia MHP Wave Meets Slowing Ternary Cathode Demand

Nickel intermediates: supply is running ahead of demand into 2026

The 2026 outlook for nickel intermediate products (largely Indonesian MHP and high-grade matte feeding both nickel sulphate and refined nickel routes) points to a market in which supply growth meaningfully outpaces demand growth. The core driver is Indonesia. Multiple new hydrometallurgical projects are due to start or ramp next year, and Indonesia’s MHP capacity is projected to hit roughly 850,000 metric tons in metal content in 2026 — more than 85% higher year on year. Full-year Indonesian MHP production is expected to approach 680,000 mt in nickel metal content in 2026, up more than 45% year on year as those new lines move from commissioning to commercial output. High-grade nickel matte will continue to play a supplementary role alongside MHP.

On the demand side, growth is far less aggressive and increasingly uneven. In China — still the dominant global hub for nickel sulphate and ternary cathode production — passenger new energy vehicle (NEV) sales growth is expected to decelerate in 2026 as purchase tax incentives shift from full exemption to a 50% reduction. Policy support remains, but the tapering of incentives translates directly to slower incremental uptake of high-nickel cathode chemistries. At the same time, lithium iron phosphate (LFP) is still capturing share from nickel-rich ternary cathodes in multiple vehicle classes and in stationary storage. Projections show China’s ternary cathode material output at about 760,000 mt in 2026, slightly down year on year.

Refined nickel demand is not positioned to soak up the entire surplus either. While refined nickel production is expected to climb to roughly 1.15 million mt in 2026 — up around 9.5% year on year — that expansion is itself fed by the same surge in intermediates. In other words, the system is simultaneously adding feedstock (MHP/matte) and downstream refining capacity. That keeps the balance sheet heavy on the supply side.

The structural read-through: without a parallel surge in nickel-intensive cathode demand, nickel intermediates will remain oversupplied relative to incremental offtake. That caps upside for nickel sulphate and related precursor grades unless cost or policy levers intervene.

Cost floors, sulfur logistics, and Indonesia’s RKAB quota approvals

Even in a market where supply is outpacing demand, nickel prices rarely collapse without resistance. Cost is the first line of defense. Estimates point that in 2026, the cost of Indonesian MHP — after accounting for cobalt credits — will average about $11,000 per metric ton (metal content), roughly 3% higher year on year. High-grade nickel matte is expected to land closer to $13,800/mt (metal content), up around 7% year on year.

Why are costs rising when production is scaling?

RKAB quotas: Indonesia’s mining production quotas (RKAB approvals) are now a policy lever. The pace and strictness of quota approvals will influence ore availability and pricing. Authorities are expected to actively manage ore prices and quota releases “based on market supply and demand,” which in practice means preventing nickel ore from being dumped too cheaply and compressing upstream margins to unsustainably low levels.

Sulfur constraints: MHP projects rely on large volumes of sulfuric acid leaching. As Indonesian hydromet capacity ramps, so does sulfur demand. More buyers competing for sulfur feed tightens that market and pushes sulfur costs higher, which flows straight into MHP and nickel matte production costs.

Ore depth and ESG: Indonesia’s initial wave of high-grade, infrastructure-adjacent laterite has largely been harvested first. As production moves to more challenging deposits and operators face rising ESG compliance expectations, cost inflation becomes structural, not temporary.

This creates a de facto floor. Even if nickel intermediate prices soften due to oversupply, they will meet a rising cost base anchored by ore policy, sulfur logistics, and ESG spend. The implication is that nickel can drift down, but sustained sub-cost pricing is less likely unless demand deteriorates faster than expected.

Near-term nickel pricing: macro relief meets structural surplus

As of October 27, 2025, refined nickel prices in China are stable-to-firm versus the previous session, buoyed more by macro sentiment than by radical changes in physical tightness. The #1 refined nickel price range was quoted at 121,700–124,400 yuan/mt, with an average of 123,050 yuan/mt, up 150 yuan/mt day on day. The mainstream Jinchuan brand premium averaged about 2,450 yuan/mt, actually down 100 yuan/mt as spot sellers trimmed offers. Electrodeposited nickel brands were transacting between a 100 yuan/mt discount and a 200 yuan/mt premium.

On the futures side, the most-traded SHFE nickel 2512 contract closed the prior night session up 0.23% and settled the morning of October 27 at 122,280 yuan/mt, up roughly 0.25%. Traders are treating 120,000–124,000 yuan/mt as the current reference band.

What’s holding nickel up despite looming 2026 surplus signals? Two macro variables:

China–US trade tone: Economic and trade consultations in Kuala Lumpur produced what officials described as constructive discussions on export controls, tariff suspensions, and logistics costs, with both sides reaching preliminary consensus and moving toward internal approvals. That eased market fears of a fresh escalation in trade friction.

US inflation and rate expectations: US CPI for September printed at 3% year on year (unadjusted), slightly below consensus on the core measures. The softer inflation print led traders to increase bets that the US Federal Reserve will deliver two more interest rate cuts within 2025. Lower-for-longer US rates typically weaken the dollar and support base metals and battery metals.

In short, nickel is benefiting from macro relief and interest-rate optimism. But physically, the medium-term story is still heavy supply. The market is trading sideways, not breaking out.

4. Manganese ore and silicomanganese: stable inputs, cautious steel demand

While nickel and cobalt grab the EV headlines, manganese quietly underpins the global steel supply chain and, increasingly, certain emerging battery chemistries. Today’s manganese ore and silicomanganese (SiMn) data out of China point to a market that is fundamentally steady but not exuberant.

As of October 24, prices at northern Chinese ports were broadly flat week on week:

South African high-iron fines: 29.3–30 yuan/mtu.

South African semi-carbonate: 34–34.5 yuan/mtu.

Gabonese fines: 39.6–40.2 yuan/mtu, up ~0.25% WoW.

Australian lumps: 40.2–40.9 yuan/mtu.

South African medium-iron fines: 35–35.7 yuan/mtu.

Southern ports saw similar stability:

South African high-iron fines: 30.6–31.1 yuan/mtu.

South African semi-carbonate: 36.9–37.4 yuan/mtu.

Gabonese fines: 40.6–40.9 yuan/mtu, up ~0.49% WoW.

Australian lumps: 40–40.5 yuan/mtu.

South African medium-iron fines: 36.4–37.1 yuan/mtu.

Several factors are holding manganese ore prices steady to slightly firmer:

Stronger forward offers: Jupiter set its November 2025 price for Mn34% South African semi-carbonate fines at $3.65/mtu. UMK quoted Mn36% South African semi-carbonate lumps at $4.1/mtu (CIF main Chinese ports), up $0.1/mtu month on month.

Limited arrivals: Port arrivals of Gabonese ore are reportedly relatively low heading into late October and November, which tightens availability for certain specs.

Reluctance to discount: With forward costs supported and arrivals constrained, miners are unwilling to make meaningful concessions.

Downstream, the SiMn alloy market is cautious. The SM2601 contract has been oscillating in a narrow 5,746–5,848 yuan/mt band, with open interest around 350,000 lots. HBIS Group’s final October tender price for SiMn came in at 5,820 yuan/mt — slightly above the second-round inquiry price of 5,800 yuan/mt but notably below September’s 6,000 yuan/mt. Most mills are bidding near 5,800–5,850 yuan/mt, signalling limited enthusiasm to lift alloy prices. Plants are largely producing steadily and buying ore on a just-in-time basis. The result is a “volatile but rangebound” alloy market with little macro catalyst.

For manganese, the key question is not runaway upside, but whether downstream steel demand can absorb current ore offer levels without forcing discounts back onto miners. So far, ore suppliers are dictating tone, not steel mills.

Western Mines and the geopolitics of “clean nickel”

Beyond China and Indonesia, junior developers in traditional Class 1 nickel jurisdictions are positioning themselves as future low-cost, ESG-compliant alternatives to Indonesian laterite-to-MHP supply. Western Mines Group, for example, has begun a scoping study and metallurgical testing program for its Mulga Tank project, which it calls Australia’s largest nickel deposit. The company estimates Mulga Tank contains roughly 5.3 million metric tons of nickel metal, including 1.6 million mt in the indicated category and 3.5–3.6 million mt inferred. Management argues this places Mulga Tank among the top 10 — potentially top 5 — nickel deposits globally by contained metal.

Western Mines is explicit about the commercial thesis:

Target high recoveries and low unit costs from a large-scale nickel sulphide system.

Deliver Class 1-style nickel units that meet Western OEM and battery supply chain ESG requirements.

Exploit what it sees as a “firm floor” around $15,000/mt in the London Metal Exchange (LME) three-month nickel price. Since mid-2025, LME nickel has mostly traded between $15,000/mt and $15,500/mt, down from $16,000–$17,000/mt in the same period a year earlier, but still above what Western Mines views as sustainable break-even for Indonesian laterite projects once you adjust for future ESG and logistics costs.

They also argue that Indonesia’s cost base is rising structurally. Operators there initially mined the highest-grade, closest-to-infrastructure laterite first. As projects move to harder-to-access ore and face increasing ESG compliance expectations, Indonesian nickel will no longer be as cheap as it was during the 2021–2024 buildout. Western Mines’ bet is that Western Australia — described by the company as a “world-class nickel province” — can capture premium pricing in a world that needs transparent, lower-carbon nickel for EV cathodes but is wary of concentrated geopolitical risk.

Whether that thesis holds will depend on two things:

If LFP keeps eating into nickel-rich chemistries in mainstream EVs and stationary storage, demand growth for high-nickel cathodes may undershoot bullish projections, capping nickel prices even if Indonesian costs rise.

How aggressively automakers and governments are willing to pay an ESG premium for “clean nickel” to diversify away from Indonesia and China.

Outlook

Nickel: neutral near term. Manganese ore: neutral-to-slightly bullish. SiMn alloys: neutral-to-bearish.

From November 2025 through April 2026:

Nickel: Spot and SHFE nickel are likely to remain rangebound around 120,000–124,000 yuan/mt in China. Macro sentiment (trade détente signals, US rate-cut expectations) is supportive, but the physical market knows a wave of Indonesian MHP capacity is about to hit in 2026 while Chinese ternary cathode growth slows. That argues for sideways trading rather than a sustained rally.

Cost support: Rising sulfur costs, managed Indonesian ore quotas (RKAB approvals), and ESG-driven cost creep in Indonesia act as a floor under nickel intermediate prices. The downside is buffered, but the upside is capped by muted ternary cathode demand growth.

Manganese ore: With Gabonese arrivals tight and miners firming November offers (e.g., UMK at $4.1/mtu CIF, up $0.1/mtu MoM), high-grade ore prices in China look supported. That gives manganese ore a neutral-to-slightly bullish bias.

SiMn alloy: Steel mills continue to push SiMn tender prices down versus September levels (from ~6,000 yuan/mt to ~5,820 yuan/mt for HBIS), and alloy producers are selling into a cautious demand environment. That implies neutral-to-bearish sentiment for SiMn margins in the near term.

For investors and procurement desks, the key call is that nickel’s medium-term (2026) balance is fundamentally heavy, manganese ore is quietly firming on supply discipline, and alloy margins are being squeezed by weak steel mill enthusiasm. The strategic wildcard is ESG-compliant non-Indonesian nickel: juniors like Western Mines are betting that Western OEMs will pay for diversification. Over the next six months, sentiment around that thesis should strengthen if automakers signal a willingness to sign long-dated offtake at premia.