(Bloomberg) -- After a robust rally, metals prices are starting to pull back.
Copper, aluminum, zinc, lead and nickel retreated on Tuesday as investors focused on the dollar and evidence of ample supply in the physical market. Palladium also retreated, while spot silver fell as much as 3.2 percent.
“We've had a significant rally across base metals, and it's hard to justify a further move higher at these levels,” Warren Patterson, a commodities strategist at ING Groep NV, said by phone from Amsterdam. “There's probably a fair bit of profit-taking going on.”
Read: One Thing Missing From Copper Boom Is Buyers of Actual Metal
Metals have been on a tear since May as enthusiasm over growth in China and demand from electric vehicles brought in new investors. The rally sent copper above $7,000 a metric ton for the first time in three years and palladium to a record.
COPPER
Copper dropped 1.8 percent to settle $7,078 a ton at 5:51 p.m. on the London Metal Exchange Tuesday, marking the biggest drop since Dec. 5. Rising stockpiles this year and LME spot prices trading below futures suggest that buyers aren't rushing to secure copper as factories ramp up.
The metal advanced 7.2 percent in December, capping the biggest annual gain in eight years, but has started to retreat this month. Prices are down 2.3 percent so far in 2018.
Some analysts see the rally resuming. HSBC Holdings Plc has raised its copper price forecast, responding to a recent slump in the dollar and rebounding factory-output growth that's lending support across commodity markets in recent weeks.
OTHER METAL NEWS
Aluminum slid 1.7 percent to $2,189 a ton as investors in China focused on bloated inventories and rising output in Xinjiang. Nickel dropped 2.4 percent to $12,545 a ton, leading base metals lower. Tin advanced in London.
The Bloomberg World Mining index was down 1.3 percent as of 2:40 p.m. in New York.
Palladium futures declined 1.6 percent to $1,088.15 an ounce on the New York Mercantile Exchange, after extending a rally to a record $1,133 earlier Tuesday.
--With assistance from Luzi Ann Javier
To contact the reporter on this story: Mark Burton in London at mburton51@bloomberg.net.
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Steven Frank, Joe Richter
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