More than 20% of nickel supply loss-making at current prices, Benchmark analysis shows

More than one-fifth of the nickel industry is cash negative at current prices, Benchmark’s newly released nickel cost model illustrates. While price volatility has been relatively muted year-to-date in 2025, with nickel prices trading mostly between $15,000-15,500/tonne – they are down over 10% compared to the same period a year ago.

The analysis shows that Indonesian high pressure acid leach (HPAL) plants comprise some of the industry’s lowest C1 cash costs (averaging ~$9,800/tonne in 2025) and continue to generate healthy margins – supported by-product sales, such as cobalt, that have cemented their position in the first quartile of the cost curve.

But margins are being squeezed at the other end of the cost curve: non-integrated Indonesian smelters, Chinese nickel pig iron (NPI) producers, and older ferronickel operations are amongst the industry’s highest cash costs, with many loss-making in the current price environment.

Is Indonesia’s nickel industry under pressure?

Indonesia’s low operating costs and integrated supply chains has helped its nickel industry maintain a competitive edge, as higher cost operations in Australia and other major nickel-producing regions have been squeezed out of the market by structural oversupply and falling prices in recent years.

But an emerging set of challenges threaten to erode some of these competitive advantages – including rising royalties, tighter RKAB (mining) quotas, ore grade declines, and resource depletion; factors which could significantly reshape the industry’s cost curve in the coming years.

Moreover, rising global inventories and macroeconomic headwinds could exert further downward pressure on prices in the second half of 2025 – squeezing the margins of producers on the right hand side of the cost curve even further.

From a cost-support perspective, Benchmark’s analysis indicates that a prolonged period below $15,000/tonne could prompt meaningful supply cuts – suggesting prices may not have much further room to fall.

For the first time, subscribers to the Benchmark Nickel Forecast have access to the full 2025 nickel cost curve — giving asset-level visibility into margins, cost floors, and price risk in an oversupplied market.

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