West Asia War Fuels Nickel Costs, Disrupting Indian Industry

India's electric vehicle (EV) battery and stainless-steel sectors are confronting a dual threat of escalating nickel prices and uncertain supply chains, driven by the ongoing conflict in West Asia. Refineries in Indonesia, a primary source of India's nickel imports, are experiencing shortages of essential refining components like phosphorus and sulphur due to war-related disruptions and blockades affecting crucial shipping routes.

This geopolitical instability translates into tangible challenges for India, which relies on Indonesia for approximately 80% of its ferronickel requirements. Nickel is a critical element in EV batteries, accounting for about 22% of their cost, and is also fundamental to stainless steel production. As a result, Indian manufacturers and consumers are likely to face increased procurement costs and significant planning uncertainties.

While some Indian companies, like Jindal Stainless Ltd, have implemented hedging and multi-sourcing strategies to mitigate price volatility and supply risks, others are already feeling the pinch. BMW India, for instance, has already implemented price adjustments and anticipates further increases. Experts highlight that the impact extends to battery-grade nickel intermediates, potentially tightening margins for producers.

Looking ahead, global nickel demand is projected to rise significantly by 2040, with clean energy technologies expected to be a major driver. To ensure material security, experts advocate for a diversified sourcing strategy beyond Indonesia, the strengthening of domestic recycling capacities, and investments in India's own refining and processing infrastructure.