Global nickel prices have risen "beyond the point that they're very constructive for producers," according to David Humphreys of Russian mining giant Norilsk Nickel (GMKN.RS).

Speaking on the sidelines of a copper price seminar hosted by the Catholic University in Santiago, Humphreys told Dow Jones Newswires that Norilsk is "not happy" with current London Metal Exchange nickel prices, which are hovering around $28,000 a metric ton.

"In the middle of the year it was a good (nickel) price, but right now it's damaging," Humphreys said.

"There's a significant stress on substitution and that doesn't serve the industry's interests as a whole," he added.

LME three-month nickel peaked at $30,000/ton on Aug. 23, from around $18,000-$19,000/ton in June. This was an all-time high and represented a 124% gain since the start of 2006.

And the nickel market is now illiquid, Humphreys said, with low levels of business moving the spot market.

But he added that hopefully in the coming year, Norilsk's buyers will contract more deliveries, "making life more predictable."

Demand from the stainless steel sector has been driving nickel consumption, with a backdrop of extremely tight global inventories adding to the bullish picture.

LME nickel stocks currently stand at 5,172 tons, of which 1,992 tons is held on canceled warrant, indicating it's accounted for and about to be drawn down. This leaves just 3,180 tons of nickel available to the market in warehouses, less than daily global nickel consumption of around 3,500 tons.

Humphreys refuted talk that some of the major producers have been holding back material from the market in an attempt to push prices higher.

"It's pretty unlikely, given that delivering into the spot market is a huge opportunity for producers to make an extra margin," he added.