Copper fell on Wednesday as the dollar recovered and profit-taking set in after the metal rose to a two-month high on concerns over a looming strike at the world's biggest copper mine in Chile. Three-month copper on the London Metal Exchange closed down 0.7 percent at $5,947 a tonne, having earlier touched a two-month peak of $6,007. Trading activity was dampened by the week-long Lunar New Year holiday in China, which runs until Friday.
Workers at BHP Billiton's Escondida mine in Chile have voted to reject a wage offer and go on strike.
The strike is due to begin in about 48 hours but the workers' union said the company will likely request government mediation to attempt a resolution, which would delay any strike action for about another week.
Escondida produced 1.15 million tonnes of copper in 2015, about 6 percent of the world's total.
"Investors might be viewing the (Chile strike) disruption as priced in. (Also) expectations for infrastructure spending in the US are overdone. If you build a highway in the states you don't need copper," said Norbert Rucker, head of commodities research at Julius Baer.
Investors' hopes for a fiscal boost to the world's largest economy from president Trump's pro-business agenda have been tempered in recent days by concerns over the negative impact of his populist policies.
Copper failed to gain traction from stronger-than-expected US private payrolls and manufacturing data as traders focussed instead on an uptick in the dollar and awaited further news on the looming Chile strike.
A stronger dollar makes dollar-priced metals costlier for non-U.S investors.
"A potential 1 million tonnes of world output, or 5 percent of supply, may be at risk of disruption this year compared to 600,000 tonnes in 2016. Meanwhile LME on-warrant stocks have been declining," broker Marex Spectron said in a note.
Overnight, industrial metals were broadly supported by news of steady manufacturing in top copper consumer China. The official Purchasing Managers' Index (PMI) stood at 51.3 in January, compared with the previous month's 51.4.
Zinc closed up 0.7 percent at $2,880 a tonne after hitting a two-month peak earlier. LME zinc stocks are near their lowest level since June last year.
Aluminium ended flat at $1,819, while nickel closed up 3 percent at $10,250 after rising by 3 percent in the previous session.
Some Philippine mines need to be shut given the environmental harm they have caused, the minister in charge of the sector said on Wednesday, a day before the government announces the results of a review of the country's mines.
Tin closed up 0.1 percent at $19,850 while lead closed down 1.6 percent at $2,333 a tonne.