Aluminium retreated from a 20-month high as investors booked profits and on expectations that its prolonged rally will be brought to a halt by increasing supply.
Benchmark aluminium on the London Metal Exchange closed 0.5 per cent lower at $US1,826 a tonne, after it touched the May 2015 high of $US1,835 in the previous session.
Aluminium rose 12 per cent in 2016 as the market tightened, but analysts expect prices to come under pressure from higher Chinese production this year.
"We are sceptical that aluminium can hold on to these gains," said Caroline Bain, senior commodities economist at Capital Economics, adding that profit-taking was another factor in Thursday's price decline.
"The big story is that the rally in prices last year is encouraging additional production, particularly in China...We think oversupply is going to become a feature of this market."
Inventories of aluminium inched slightly lower to 2.3 million tonnes but are up nearly 10 per cent over the last month.
"Aluminium has been neglected for so long and with copper and other metals going up, there is no reason why aluminium should do some catching up," RJH Trading's managing director Charles Swindon said.
Mr Swindon said supply would inevitably rise because many emerging markets producers were looking to produce at near record levels despite high stock piles.
Metals came under further pressure from comments by US Federal Reserve Chair Janet Yellen on Wednesday suggesting that US interest rates could be raised quickly this year.
Ms Yellen's comments also lifted the dollar, which rose by 0.5 per cent against a basket of major currencies on Thursday, making assets denominated in the greenback more expensive for holders of other currencies.
Among other metals, copper fell 0.5 per cent to $US5,739 a tonne, having earlier touched $US5,668, its lowest since January 10.
The market was awaiting Chinese GDP data and more detail from President-elect Trump on his plans to increase infrastructure spending that could benefit industrial metals such as copper, Bain said.
Nickel fell 2.5 per cent to $US9,925, shrugging off news on Wednesday that the Philippines cancelled environmental permits for four more mining projects including a nickel venture.
Tin fell 1.9 per cent to $US20,700 a tonne, zinc slipped 0.3 per cent to $US2,769 while lead lost one percent at $US2,285, just under a one-month high.