Nickel fell the hardest dropping 7.2% or $US944 to $US12,213 on the spot market.
Nickel for three months delivering shed the same percentage to $US12,300.
The price drop was reflected on the share market with local nickel stocks giving back its gains of the last few days.
At 12.10pm EDT Western Areas was 7.1% lower on $3.93, Panoramic Resources fell 9.6% to $1.265 and Mincor Resources was down 5.7% to 91.5c.
Other metals told a similarly sad story.
The spot price of copper dropped 1.4% to $3306.75, lead was down 3.7% to $1147.50 and zinc shed 2.1% to $1265.
Base metals stocks were down across the bourse, as were the mining majors.
At 12.11pm EDT BHP Billiton was down 5.7% to $30.75 while Rio Tinto had slumped 4.4% to $44.88.
Analysts and traders said the post New Year base metal rally appeared to be over as the reality of softening demand, rising stocks and negative economic data resurfaced.
"The recent gains seen on the back of the upcoming rebalancing of commodity indexes slowed overnight and investors returned their focus to the slowing economy and its bearish impact on demand," Dow Jones reported an unnamed market participant as saying.
Gold offered no reprieve with the spot price of the precious metal losing 0.04% overnight to trade at $841.60, a decline attributed to weaker commodities and a drop in crude oil.
Gold's decline was matched among local gold plays with Newcrest Mining trading down 4.55% to $28.34 and Lihir Gold down 4.6% to $2.49 at 12.12pm EDT.
At 12.14pm EDT the Australian dollar was fetching 70.76c against the US dollar.
