Nickel producers believe the price of the commodity will remain buoyant despite recent volatility.
But some operators are concerned that marginal producers could boost production, putting downward pressure on prices.
Nickel is trading around $US7 per pound, up from $US6 a year ago.
But the value of the stainless steel ingredient has fallen from a recent peak of $US9 per pound in September after the Philippines said it was considering a ban on nickel shipments in line with Indonesia.
Chief executive of Perth-based Western Areas, Dan Lougher, said the industry mood was upbeat, a week after returning from London where he spoke to investors, smelters and traders.
"The nickel market is going to grow," Mr Lougher said.
"When the hedge funds get on board it'll run, and when it runs it'll run really hard."
Over the past 12 months the Perth-based nickel producer's share price has doubled as nickel fortunes improved.
Mr Lougher said Western Areas was one of the lowest cost producers of nickel in the world but acknowledged there was a risk to established mines if marginal operators produced larger amounts.
"Globally there's no purpose in projects which are not going to make money in an average market," he said.
"Keeping that production online is at some point going to come back and bite us because it'll drive a lower price."
Meanwhile, Western Areas is continuing talks about offtake deals with major smelters and traders.
Mr Lougher said BHP Billiton's Nickel West sale process was dragging on but added that Western Areas was eager to position itself for future offtake agreements with a new owner.
Western Areas has contracts with Nickel West spanning to 2016.
The company plans to remain independent by keeping rolling short-term contracts, rather than locking up offtake agreements.
Shares in Western Areas were 13 cents, or 3.3 per cent, higher at $4.35 at 1250 AEDT.
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