Nickel hit a new high on the London Metal Exchange on Wednesday but drifted lower later in the day, along with other base metals on profit-taking ahead of today's US Federal Reserve meeting, traders and analysts said.
Nickel for delivery in three months, which has risen by some 53 percent this year, touched a new all-time high of $51,800 on Wednesday.
"The consistent uptrend in nickel - or any other base metals for that matter - is because of the steadily decelerating warehouse stocks," analyst Pradeep Unni at Vision Commodities told Reuters.
LME nickel stocks fell by 174 tonnes to 4,458, with only 3,270 available to the market - less than a day of global consumption. Further delays at European Nickel's flagship Caldag project also underpinned prices.
By the end of the official session nickel, a key ingredient in stainless steel, fell back to $49,295/49,300 against the close of $51,200 on Tuesday.
Copper for three-months delivery lost $145 or 1.8 percent and ended the official session at $8,020. The metal has risen around 30 percent this year and hit $8,335 last week, its highest in almost a year.
"The uptrend remains but it looks as if prices will come off a bit as people step aside and some take home profits ahead of the Fed's meeting," an LME floor trader said.
Financial markets widely expect a decision to keep benchmark overnight rates at 5.25 percent. But markets will watch closely to see if officials have grown more relaxed on inflation or more fretful that the economy could stumble badly.
Most analysts anticipate the Fed will say inflation remains its main concern when it announces its decision around 2:15 pm (1815 GMT), even though recent data has shown non-food, non-energy inflation easing.
"Any sign of an easing in monetary policy would not be bullish for metals," analyst Michael Widmer at Calyon said in a report, adding that such a move by the Fed would indicate an economic slowdown. "Crude oil is drifting and that is taking all the commodities down with it," analyst John Kemp at Sempra Metals said.
Oil pulled back to below $65 after a hefty rise in crude stocks in top consumer the United States. French cable group Nexans, the world's biggest private buyer of copper, said on Wednesday it expected the non-ferrous metal's price to remain firm over the next two to three years, driven by strong industrial demand.
Zinc, which gained almost 15 percent last week shed $70 to $4,060, while aluminium fell $10 to $2,885 after touching a one-month high of $2,927 earlier. Dealers appeared unmoved by a take-over bid by the world's largest producer, Alcoa, for smaller rival Alcan but the bid has fuelled talk of more mergers.
"No doubt that consolidation will continue - most firms have a lot of money," Swedish miner Boliden's CEO and president Jan Johansson said. Speculation on the world's second-biggest mining company, Rio Tinto could be swallowed up by larger rival BHP Billiton spurred London-listed mining shares between 2-5.5 percent. Shares in Rio Tinto soared over 21 percent. Tin was unchanged and last quoted at $14,200/14,300, while lead shed $20 at $2,065 after hitting an all-time peak of $2,140 on Tuesday.