Sept. 18 (Bloomberg) -- Copper fell for a second day in London, almost erasing this week’s climb, as rising inventories spurred concern that demand may weaken. Stockpiles monitored by the London Metal Exchange expanded for a 16th day to 327,700 metric tons, the most since May 22. In Shanghai, inventories climbed 7 percent this week to the highest since April 2004. Prices also dropped as the dollar rebounded, making metals priced in the currency more expensive for holders of other monies. “We have seen quite a big build in copper stocks, and the fundamentals are looking weaker,” David Wilson, an analyst at Societe Generale SA in London, said by phone. “Investors are beginning to look at that, and they are a bit concerned.” Copper for three-month delivery fell $120, or 1.9 percent, to $6,265 a ton on the LME at 10:11 a.m. local time, cutting this week’s gain to 0.2 percent. Futures for December delivery slid 1.2 percent to $2.86 a pound in electronic trading on the New York Mercantile Exchange’s Comex division. Inventories tracked by the LME have increased 9.6 percent this month after gaining 6.4 percent in August and 5.6 percent in July. Metal booked for removal from warehouses fell for a third day, sliding 21 percent to 6,400 tons, or 2 percent of total LME stockpiles. That’s down from 21 percent at the start of May. Dollar Strengthens The Dollar Index, a six-currency gauge of the greenback’s performance, rose for the first time in four days, adding as much as 0.7 percent. It has lost 5.9 percent this year. “A weakening dollar is still going to maintain reasonable support,” Societe Generale’s Wilson said. “The dollar has really been the driver behind this year’s surge in most metals.” The LME Index of the six main metals traded on the exchange has jumped 72 percent this year. Lead and copper have doubled, and aluminum, the gauge’s weakest performer, is up 27 percent. Copper may gain again next week as the U.S. currency spurs concern about inflation, a survey showed. Consumer prices in the U.S. rose more than economists had forecast in August, according to government figures released on Sept. 16. Among other LME metals for three-month delivery, aluminum fell 0.8 percent to $1,950 a ton. The lightweight metal’s “free fall” is over as the U.S. economy stabilizes and begins a “sustainable” recovery, German magazine Capital cited Klaus Kleinfeld, Alcoa Inc.’s chief executive officer, as saying in an interview. The company is the largest U.S. aluminum producer. Industrial production in the U.S., the world’s second- largest copper and aluminum consumer, rose in August for a second month, the first consecutive gains since December 2007, the Federal Reserve said on Sept. 16. Lead dropped 4.4 percent to $2,175.75 a ton, and nickel fell 1.9 percent to $17,250 a ton. Zinc shed 1.9 percent to $1,922 a ton, and tin fell 0.8 percent to $14,675 a ton. To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net

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