West Asia War Strains Indonesia Nickel Output, Hits Indias EV Battery and Stainless Steel Sectors

India's electric vehicle battery industry, energy storage segment and stainless steel makers are bracing for higher input costs and tighter supply of nickel derivatives, as the war in West Asia disrupts the upstream supply chain in Indonesia. Indonesia is the worlds largest source of refined nickel and India depends heavily on it for finished nickel products.

About 80 per cent of India's ferronickel demand was sourced from Indonesia in FY26, going by commerce and industry ministry data on .69 million of total ferronickel imports during the year. Ferronickel and nickel pig iron, both alloys of iron and nickel, are the main raw materials for stainless steel. Nickel accounts for roughly 22 per cent of the cost of an electric vehicle battery, which gives this metal an outsized role in India's energy transition.

The current supply concern is not yet a physical shortage but a cost and certainty problem. Indonesian refining plants that use the High Pressure Acid Leaching (HPAL) process for producing battery-grade nickel intermediates depend heavily on sulphur and phosphates imported from West Asia. The conflict and the blockade of the Strait of Hormuz have disrupted these inputs and pushed up the cost of refining.

Domestic nickel prices in India climbed 7.2 per cent to 1,71,540 rupees per quintal in April 2026 from 1,59,890 rupees in February, before the war began. Global nickel prices also rose to ,796 per quintal in April from ,717.30 in February, according to data from the Centre for Monitoring Indian Economy.

Premium electric vehicle makers using NMC battery chemistry are particularly exposed. BMW India said it has already implemented price adjustments of up to two per cent in January and April, citing rising logistics and material costs and a weaker rupee, and that further increases during the rest of 2026 may be needed. Some manufacturers are also moving towards lithium-iron-phosphate batteries, which do not use nickel, to reduce this exposure.

Larger and more diversified firms appear better placed to ride out the disruption. Jindal Stainless, India's largest stainless steel producer, said its multi-sourcing strategy across nickel pig iron, scrap and slabs, combined with its investments in Indonesia, has so far insulated the company from price swings. The company noted, however, that Indonesia has tightened nickel ore quotas and revised its pricing formula, which has pushed up costs across all nickel alloys.

A FICCI-Deloitte report from February 2026 estimated that global nickel demand will rise to 5.5 million tonnes by 2040 from 3.4 million tonnes in 2024, with clean energy technologies contributing 42 per cent of this demand. Experts say India needs a broader materials security strategy that goes beyond mining, including diversified sourcing from countries such as Australia, Japan and Norway, stronger domestic recycling, and investment in refining and processing capacity within India.