Copper for three-months delivery on the London Metal Exchange traded at $6,552 a tonne in official rings from $6,570 on Wednesday. Other base metals and oil also fell.

Copper inventories, which have been rising since mid-July, climbed 5,775 tonnes to 379,825 tonnes and are at their highest level since early May.

“The Chinese have topped up and are quite heavy on stocks now,” said David Thurtell, an analyst at Citi. “They’ve got plenty of reserves so there’s no need for them to do lots of buying at these levels.”

He said that this year copper would not retest 2009 highs above $6,700, but it could rise towards $7,000 in 2010.

The copper price has more than doubled this year, supported by hefty buying by China, the world’s top consumer of the metal used in power and construction, and dollar weakness.

But analysts warn high prices are crimping China’s buying.

“For sustained gains we’d need to see the Chinese come back,” said Andrey Kryuchenkov, analyst at VTB Capital.

“We’ll still stay range-bound because I don’t see Chinese buying at the moment at these prices.”

Rate spate

World stocks fell after the Federal Reserve kept interest rates near zero for “an extended period”.

Also, the European Central Bank and Bank of England (BoE) both left interest rates on hold. The BoE also expanded its quantitative easing programme by 25 billion pounds to 200 billion pounds to help revive Britain’s recession-hit economy.

A slightly higher U.S. currency also dented copper by making dollar-priced commodities more expensive for holders of other currencies. But analysts predict further dollar weakness will support industrial metals prices.

“The Fed is reiterating that they’re going to keep rates low for a certain period...this could mean (more) weakness in the dollar before the year-end,” Kryuchenkov said.

Aluminium traded at $1,919.5 from $1,921. Demand for the metal used in transport and packaging still suffers.

Latest data showed LME stocks of aluminium fell 2,300 tonnes to around 4.5 million tonnes, having recently declined from record highs of around 4.6 million tonnes.

Despite lofty stock levels, aluminium prices have risen by a quarter so far this year, supported in part by dollar weakness and in part by a lack of available nearby material.

Analysts say more than 70 percent of LME aluminium stocks are tied up in finance deals which will start expiring at the year-end. They warn, however, that there is a lack of visibility about how long it will take for all these contracts to expire.

Citi’s Thurtell said aluminium inventories have peaked, but warned any stock declines would be slow.

“The Chinese have cranked up production,” he said. “The rest of the world has got plenty (of production) to reopen if they want to...And if they do, that will largely match the rise we’ll have in demand when the western world recovers,” he said.