China ramps up nickel stockpiling amid trade tensions, price slump

China is significantly increasing its nickel reserves, taking advantage of the metal's low prices as it braces for escalating trade tensions with the United States and aims to secure critical supply chains.

According to sources familiar with the matter and a Financial Times analysis of trade data and withdrawals from the London Metal Exchange (LME), Beijing has purchased up to 100,000 tonnes of nickel for its state reserves since December. Three additional sources confirmed the state-backed buying spree, although they did not specify volumes, Caliber.Az reports.

Industry estimates suggest that before these recent acquisitions, China’s nickel stockpile ranged between 60,000 and 100,000 tonnes—indicating that it may have doubled its reserves within the year. The Chinese government does not typically disclose the size of its strategic metal holdings.

“There has been a big increase in Chinese imports of nickel metal and it’s going into the government’s strategic stockpile,” said one senior industry figure.

The surge in stockpiling comes as Beijing faces intensifying geopolitical pressure from Washington and seeks to maintain control over its industrial base. Nickel, a metal vital for producing stainless steel and electric vehicle (EV) batteries, has dropped to its lowest price levels since 2020, offering China a timely opportunity to accumulate reserves.

China’s National Food and Strategic Reserves Administration has reportedly been acquiring high-purity “class one” nickel since December. This type of nickel is primarily used in electroplating for aerospace and consumer goods, as well as in EV battery production.

Customs data reveals that China imported 77,654 tonnes of pure nickel in the first five months of 2025—the highest for this period since 2019, and more than double last year’s figure.

However, the rise in consumption of class one nickel remains modest, growing only 5 to 10 percent annually, according to one leading industry analyst. The International Nickel Study Group forecasts a 4.9 percent increase in overall Chinese nickel demand for 2025, including lower-grade products such as nickel pig iron.

That discrepancy between import volumes and consumption trends “is a smoking gun for stockpiling,” said the senior industry figure.

China is reportedly also adding other industrial metals—including lithium, cobalt, and copper—to its reserves. A person close to a government trading partner said the strategic reserves administration signaled its intent to purchase these metals in a notice issued in March.

Nickel prices have fallen by roughly 40 percent over the past two years, primarily due to a surge in Indonesian supply. Indonesia, home to the world’s largest nickel reserves, now controls two-thirds of the global market. Its past export restrictions on raw nickel have negatively affected Chinese steel producers.

“Because the nickel price crashed last year, it was actually a good time to gear up the national reserve,” said the same person familiar with the buying strategy.

China’s sustained purchases may also be preventing nickel prices from falling further, amid slowing demand for nickel-based EV batteries. This view is supported by sharp increases in class one nickel withdrawals from LME warehouses. Between January and June 27, global buyers pulled 78,798 tonnes from LME stocks—more than quadruple the 17,544 tonnes withdrawn during the same period in 2024.

LME data also shows that nickel trading volumes in the most recent quarter were the highest since early 2020.

“The idea of China stockpiling nickel is something we’ve been having lots of conversations about with market participants and clients,” said one market analyst.

Much of the nickel China is buying is believed to originate from Indonesia, now a major supplier to LME warehouses after the exchange approved refined nickel from Indonesian and Chinese companies. Domestic Chinese output is also contributing to the reserves, though this is not reflected in LME data or official import statistics.

By Sabina Mammadli