LONDON: Most industrial metals prices fell on Tuesday as caution held sway across markets ahead of US inflation data that may shed light on when the Federal Reserve will taper its stimulus.
Falls in aluminium and nickel prices from multi-year highs have also prompted profit taking across metals, analysts said.
Benchmark copper on the London Metal Exchange (LME) was down 1.5% at $9,416 a tonne in official trading having fallen 1.3% on Monday.
A high inflation reading could knock prices by raising the prospect of the Fed withdrawing some of the cash that helped drive prices higher, said Saxo Bank analyst Ole Hansen.
But strong demand should support metals and the combination of inflation and weak economic growth would encourage buying of commodities as an inflation hedge, he said.
"The overall sentiment towards metals is still very favourable," he said.
China aluminium smelters meet to address 'irrational' price spike
Inflation: Inflation expectations in the United States and Europe have risen to multi-year highs.
China Housing: In China, the biggest metals consumer, cash-strapped property group China Evergrande warned of default risks amid plunging property sales.
China COVID: New local COVID-19 infections more than doubled to 59 in China's southeastern province of Fujian, health authorities said.
Aluminium: Benchmark aluminium was down 1.4% at $2,857 a tonne. Prices leaped to $3,000 for the first time since 2008 on Monday before tumbling back to end down 0.9%.
Analysts at Citi said output cuts in top producer China would cause a 1.1 million tonne deficit in 2021, predicting prices would rise to $3,100 within a year.
Nickel: LME nickel was down 0.6% at $19,600 a tonne after falling 3.3% on Monday, its biggest one-day fall since June. On Friday, nickel touched $20,705, its highest since 2014.
While cash copper and aluminium have flipped to a discount against the three month contracts, cash nickel still trades at a premium, pointing to tight supply.
Other Metals: LME zinc was down 2% at $3,023 a tonne and lead fell 1.2% to $2,265.
Tin bucked the trend and was up 0.2% at $33,555.