China’s net imports of nickel sulphate surged 45% YoY in Dec 2025, dominated by Indonesian supply, underscoring a growing reliance on integrated NPI-to-sulphate capacity abroad. Meanwhile, cobalt intermediate products remain structurally tight with prices reaching $26/lb as DRC export quotas slowly clear. These trends highlight the brittle nature of battery metal supply chains, where downstream cathode production is increasingly concentrated in China, but raw material processing is geopolitically focused in a few nations. Policy responses, like the U.S. review of critical mineral imports, aim to reshape this landscape.
The nickel market narrative remains firmly centered on Indonesia’s dominance in intermediate products. The latest Chinese customs data reveals a stark picture: in December 2025, China’s net imports of nickel sulphate (metal content) reached 7,299 mt, up 45% year-over-year, a 25-year high. The primary driver was increased shipments from Indonesia and South Korea (where Indonesian-sourced raw materials are often processed). This reflects the rapid ramp-up of Indonesia’s high-pressure acid leach (HPAL) and matte-to-sulphate conversion capacity, which is feeding the voracious appetite of China’s precursor and cathode industry.
This growing import dependence occurs alongside persistent supply disruption risks within Indonesia. SMM analysis notes that Indonesia’s plan to cut nickel ore RKAB quotas and an investigation into a logistics monopoly at the IMIP park are core price drivers. These factors, coupled with high production costs for domestic nickel salt smelters, kept the battery-grade nickel sulphate index price stable at 32,884 yuan/mt on Jan 28, despite sluggish pre-holiday trading.
The cobalt market is experiencing a pronounced tightness in intermediate products (cobalt hydroxide/oxide). This week, the market “maintained a strong pattern” with some overseas miners conducting concentrated procurement domestically at ~$25.5/lb, pushing high-end offers to $26/lb. This tightness is attributed to slow quota clearance from the DRC, with a ~3-month shipping delay expected to maintain structurally tight conditions until at least April 2026 when material arrives in volume.
This contrasts with a weaker refined cobalt metal market, where spot prices drifted lower toward 430,000 yuan/mt as the futures price decline dampened buying sentiment. The price spread between refined metal and cobalt salts has reopened the profit window for reverse smelting, which should provide a floor for metal prices. This divergence highlights the different dynamics between the upstream intermediate material (tight) and the more discretionary metal market (softer).
The fragility of these concentrated supply chains is triggering policy responses. On January 14, 2026, the White House issued a proclamation under Section 232 to adjust imports of processed critical minerals, noting the U.S. lacks domestic processing capacity for nickel and cobalt. This aligns with M2i Global’s merger announcement with Volato Group, aiming to build a “Critical Mineral Reserve and Marketplace.”
Technologically, First Atlantic Nickel reported promising results for its awaruite (nickel-iron-cobalt alloy) project in Newfoundland. This native metal alloy is magnetically recoverable and could bypass traditional smelting, offering a potential “mine-direct-to-refinery” pathway for North American nickel and cobalt. Such innovations are gaining attention as solutions to the smelting bottleneck and geopolitical risk.
Nickel: The massive and growing influx of Indonesian sulphate is fundamentally bearish for the global nickel balance, pressuring prices. However, this is countered in the near term by high costs and ongoing Indonesian policy volatility, creating a range-bound, neutral market with a slight bearish tilt over the next 6-12 months as supply growth accelerates.
Cobalt: The intermediate product market remains bullish due to proven physical tightness expected to last through Q1. Refined cobalt will be neutral, supported by cost floors but limited by sufficient downstream inventory. Watch DRC export quotas and Chinese stockpiling behavior post-Lunar New Year for directional cues.