Russian president Vladimir Putin has recently made explicit suggestions of metal export restrictions, in retaliation against Western sanctions. Russia is a key producer of nickel, aluminium, uranium, palladium, and titanium. We analyse Russia’s position within the nickel market to understand the possible implications of a nickel export ban. While Russia is still a key producer of high purity Class I nickel, and certain European nations still import large quantities of Russian nickel, our analysis shows that an export ban, or an eastward shift of nickel supply chains would not have major impacts to the nickel market.

Russian nickel: the current landscape

On September 12th 2024, Vladimir Putin suggested that Russia could impose metal export bans to Western nations in retaliation for sanctions applied after his full-scale invasion of Ukraine. Russia is large producer of nickel, as well as aluminium, uranium, palladium, and titanium. So should Western nations be nervous about his latest geopolitical and economic threat?

Russia’s nickel industry is dominated by Norilsk Nickel, which operates two key production sites: the Kola Division and the Polar Division. Polar Division produces concentrate, which is shipped to Chinese smelters in Xinjiang province, and matte that is refined both domestically at Kola Division’s Monchegorsk refinery, and Norilsk’s Harjavalta refinery in Finland. In 2023, Russia produced 127,000 tonnes of primary nickel, a 15% decline from 2018 levels. This production consists primarily of Class I nickel, a high-purity form crucial for applications including advanced alloys and as a precursor for nickel sulfate, which is used within the cathode for many electric vehicle (EV) battery chemistries.

Russia’s share of global nickel production has decreased in recent years, accounting for just 5% of total mined output in 2023, down from 7% in 2021. While still significant, Russia’s market share has been eclipsed by Indonesia, which has risen rapidly over the last six years to dominate the global nickel market.

Russia’s customers: a changing landscape

We have used our Supply Monitor platform to conduct an analysis of Russian nickel flows, and how these have changed over the last few years. The Russian invasion of Ukraine in 2022 triggered a reshuffling of global nickel trade flows. Previously, Europe was the largest market for Russian nickel, but by 2023, Europe’s share of Norilsk Nickel’s exports had dropped to 24% from over 50% in 2021. Germany and The Netherlands have overseen significant reductions in Russian nickel imports. At the same time, China has grown as a destination for Russian nickel, increasing its proportion to almost 60% by 2023. India has also significantly increased its imports of Russian Class I nickel, tripling its intake in 2023 compared to the previous year.

Figure 1 shows the Russian Class I (99.8% pure LME grade) nickel exports by importing country over the period 2020 to 2023. The top graph shows the imported volumes in tonnes per country, while the lower graph shows the proportions per importing country.

However, looking at intermediate nickel matte flows, Russia’s Norilsk is still exporting to its Harjavalta refinery in Finland, which represents a key route for Russian metal into the European market. China has also increased its share of matte imports in 2023, while Glencore’s Nikkelverk refinery in Norway has ceased importing Russian matte since 2021.

Figure 3 shows the Russian intermediate nickel matte export volumes by importing country over the period 2020 to 2023.

This general shift of Russian nickel toward Eastern markets reflects broader geopolitical trends. With sanctions restricting Russian metals from reaching Western markets, Russia has deepened its economic ties with China, which continues to import Russian nickel despite sanctions. This realignment has helped buffer Russia’s nickel industry from the worst effects of sanctions, but it has also increased its dependence on a smaller pool of markets.

Global impact of a Russian nickel export ban

A Russian nickel export ban could trigger short-term disruptions in the global market, particularly in Europe, where supply chains remain vulnerable. The London Metal Exchange (LME) has already experienced price shocks due to fears of a supply shortage. In early 2022, fears of sanctions on Russian nickel contributed to a massive short squeeze, driving prices to unprecedented levels.

However, Russia’s share of global nickel production remains relatively small, contributing around 3% of total primary output. This limited market share means that while an export ban would cause initial volatility, the long-term impact is expected to be muted. Indonesia, the world’s largest nickel producer, has rapidly expanded production and now it and China account for 74% of global primary nickel output. Other producers, such as Canada and Australia, are also well-positioned to ramp up production.

Our scenario modelling suggests that a Russian nickel export ban could cause prices to spike to $17,000 per tonne in 2025, but the market would likely adjust within a year, stabilizing prices below $14,000 per tonne as alternative supplies come online​. Recycling efforts and increased production from Western sources would further help to mitigate the supply shock​.

Using Rovjok’s Supply Monitor to perform an analysis of the impacts of a Russian nickel ban

If Russian primary nickel is taken ‘off the table’, what are the consequences for the global market? In the immediate aftermath of the Russian invasion of Ukraine in February 2022, the immediate market panic about possible nickel sanctions contributed to the short squeeze that occurred on the LME through March 2022, leading to the huge price spike and subsequent suspension of trading.

However, Russian nickel represents only 10% of global intermediate production and only 3% of global primary production. The quick ascension of Indonesia to the position of leading nickel producer has relegated many previously major producing countries.

Therefore, the loss of Russian nickel would not have a large impact on long-term prices. The obvious impacts would be on European supply chains, who would need to pivot their supply of refined nickel to the far east, Indonesia and China, which together account for 74% of global primary production, or ‘Western countries’ such as Canada or Japan.

Running a simple scenario where Russia imposes a nickel export ban to ‘unfriendly nations’ starting in 2025, we reduce global supply by ~100 kilotonnes to reflect the reality that the Russian material would still be produced, but mostly reoriented to different markets (e.g. China). We see the ‘Scenario Applied’ supply line (solid blue) shifted downward slightly compared to the ‘Baseline’ supply line (dotted green).

Our price prediction for the scenario (solid red line) shows a price spike up to 17000 $/t in 2025 as the ban immediately takes effect, before dropping back down to sub-14000 $/t as the markets quickly adjust from 2026 and the dominant Indonesian supply continues unabated.

Conclusion

While a Russian nickel export ban would undoubtedly cause short-term market disruptions, particularly in Europe, the global market is resilient enough to absorb the shock. The rise of Indonesia as a dominant nickel producer, coupled with increased recycling and alternative sources, means that long-term impacts would be limited. Supply chains would need to pivot toward Asia and North America, but the global nickel market is expected to adapt quickly.

Procurement experts, governments, and industries dependent on nickel should remain vigilant and agile, diversifying their supply chains to mitigate risks posed by geopolitical tensions. With Russia increasingly reliant on China for its metal exports, the global nickel trade is poised for further shifts in the coming years.

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