Beleaguered Mirabela Nickel has been buoyed by a rise in the nickel price, gaining as much as 12 per cent on the Australian Securities Exchange.

Mirabella, which operates the Santa Rita nickel mines in Brazil, ended up 10.6 per cent, adding more than 2 cents to close at 36.5 cents.

After months of pain for nickel producers the price made a timid recovery in recent days to above $US8 per pound after falling under $US7 last month.

However, Mirabela's managing director and chief executive Ian Purdy remained conservative about the short term outlook for the commodity.

"We'd like to see that we're back at a floor price, but as we've seen from the last week nickel is volatile," he said. "Longer term in two-years plus the view is that even modest stainless steel recovery will see the nickel market fall into deficit in the supply side and we'll see strengthening of the nickel price."

Nickel producers have been under cost pressure since May when the price fell more than 40 per cent from just under $US10 per pound in February.

Others to show strain included mining giant BHP Billiton, which last month announced a $US450 million write-down for Nickel West, adding fuel to persistent speculation of a sale.

But as a pure play Mirabella was one of the most exposed, shedding almost 80 per cent of its value from $1.12 in December to 25 cents July and losing 30 per cent in one day on May 9.

Mr Purdy said Mirabela's cash cost reduction from $US7.37 per tonne to $US6.03 had also lifted investor confidence around the company.

"We're moving into full production levels in the second half of this year and our cash costs have come down steeply," he said.  "The market has just been waiting for a recovery in the nickel price."

Citigroup resource analyst Daniel Seeney said Mirabela’s performance had also been lifted by the weaker Brazilian real which has held at about 2:1 against the $USD.

“The two macro factors which they have no control over, the real and the nickel price, have started to move in their favour," he said.

Mr Seeney said despite the cash cost reduction Mirabela would still need a substantial price recovery at about the middle of next year.

Citigroup has been bullish on nickel forecasting a recovery in the fourth quarter when Indonesian nickel export bans are expected to begin limiting supply to China’s nickel pig iron producers.