By Ed Ballard

Copper futures edged lower Wednesday as a stronger dollar provided a headwind to the recent base metals rally.

Copper for March delivery settled down 0.2% at $2.6005 a pound on the Comex division of the New York Mercantile Exchange.

"Futures prices have probably run ahead of themselves and we need a correction," said William Adams, head of research at FastMarkets. "These rallies are looking a bit tired now with a bit more profit-taking coming into the market."

Copper has surged more than 20% over the past three months, with other base metals seeing similar gains, helped by a run of strong Chinese industrial data.

A stronger dollar was exerting some downward pressure in the wake of the U.S. Federal Reserve's decision to raise interest rates and signal a faster-than-anticipated course of rate increases for next year.

The WSJ Dollar Index, which tracks the dollar against a basket of currencies, was up 0.8% at 93.08. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies, although this pattern has taken a back seat during the recent rally as improved sentiment toward base metals outweighed other factors.

Mr. Adams said he was "generally bullish for the fundamentals," for base metals, saying improving demand from China has coincided with reduced supply thanks to increased environmental inspections and the shuttering of some of China's obsolete production capacity.

Still, he noted a mismatch between the price gains seen in futures markets and a more lackluster physical market.

"There's no shortage of metals around. Generally we haven't seen that much of a pickup in physical premiums, but Ithink that will tighten up as we go further in to 2017," he said.

LME data showed copper continuing to pile up in warehouses. On-warrant stocks climbed by 19,950 tons Thursday to 202,800 tons, the highest level since late October.

The London Metal Exchange's three-month copper contract settled up 0.2% at $5,732.00 a metric ton.

Other base metals were mixed on Thursday. Aluminum fell 0.6% to $1,735.50 a ton and nickel closed down 1.1% at $11,300.00 a ton. Zinc rose 0.3% to $2,818.00 a ton, tin rose 0.6% to $21,230.00 a ton and lead rose 1.4% to $2,348.00 a ton.

--Stephanie Yang contributed to this article.

Write to Ed Ballard at ed.ballard@wsj.com

(END) Dow Jones Newswires

December 15, 2016 14:46 ET (19:46 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.