Global nickel supplies are so tight that Nick Moore is almost ready to give the metal the same moniker aerospace engineers and sci-fi buffs have applied to a variety of mythical or hard-to-find substances over the years.

"Nickel has become a bit like Icarus, it's flying higher and higher – in fact, we're almost renaming it unobtainium," the ABN Amro Bank NV commodities strategist said when reached at his office in London yesterday, a few hours after Anglo-Swiss mining giant Xstrata PLC announced plans to buy Canadian nickel producer LionOre Mining International Ltd. for $4.6-billion.

However, Mr. Moore also figures prices for the metal, a key ingredient of high-grade stainless steel, may already have peaked.

Prices have risen 28 per cent so far this year and tripled since last March, powered by a potent combination of soaring Chinese stainless steel production, rock-bottom inventories, delays in bringing several major new mines into production – and the entry into the market of what he called "pinstriped consumers," that is, hedge funds and other speculators.

"We are quite comfortable we [may have seen the peak], as much as anyone can be comfortable with a metal which has absolutely astonished, astounded and amazed people," he said.

Nickel reached a record high on March 16, when the cash price hit $50,875 (U.S.) a tonne – $23.08 a pound – on the London Metal Exchange and the contract for delivery of the metal in three months touched $48,500 a tonne, up from about $15,000 a year ago.

Yesterday, the three-month contract closed at $42,500 a tonne, up $300, as the LME said in a daily report that nickel inventories in warehouses it monitors around the world fell by 0.7 per cent to 4,902 tonnes. That is less than two days' of global consumption.

The recovery came amid unconfirmed reports that CVRD Inco now figures production at its massive new Goro mine in New Caledonia will not start until 2011, two years later than its previous estimate.

LionOre chief executive officer Colin Steyn was not predicting more big gains for the metal.

"Nickel prices are at unsustainable levels and if they were to remain there we would start to see value destruction in the stainless steel market, which would affect demand," he said during a conference call with analysts about the deal with Xstrata.

That's also the view of Chinese nickel powerhouse Jinchuan Group Ltd. Last week it expressed "deep anxiety" about "crazy" nickel prices, warning that some industries have already begun to replace materials that require nickel with less-costly substitutes.

As well, the governments of both China and India are trying to put the brakes on their booming economies, which could reduce demand.

Mr. Moore said that another moderating influence is that BHP Billiton's Ravensthorpe nickel mine in Australia is now set to start production early next year.

Still, he said he is looking for the average price of nickel to climb substantially this year. "Last year, it averaged $11 [a pound] or $24,250 [a tonne], and I've pencilled in $15 or $33,070 for this year," he said.

Macquarie Bank Ltd,. metals analyst Jim Lennon told a nickel conference in New Caledonia yesterday that he figures nickel prices will average between $30,000 and $32,000 a tonne over the next three years, as supplies remain tight, according to a report by Bloomberg News.

By contrast, Jacques Bacardats, president of French nickel producer Eramet SA, reportedly told the same conference that the company is budgeting for a price this year of just $10 a pound or $22,000 a tonne and that "we expect prices to accelerate to the downside as market participants de-stock."

However, one London metals trader said Eramet is well-known in the market to be betting that nickel prices will fall and to have hedged itself so that it will benefit from this. "They're talking their book, basically," the trader said.

In the meantime, Mr . Moore warned that nickel could fall sharply if speculators decide to bail out. "Once the pinstriped consumers decide they've squeezed nickel and gotten as much out of it as they can, we may well see a very dramatic slide in prices," he said.