* LME/ShFE arb: bit.ly/2wZSAEz
* GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl (Updates with closing prices)
By Eric Onstad
LONDON, May 17 (Reuters) - Aluminium prices slipped on Thursday after inventories increased, showing availability of supplies that could fill a gap if U.S. sanctions on Rusal are not lifted.
On-warrant aluminium stocks in warehouses certified by the London Metal Exchange - inventories that are not earmarked for delivery - surged by 153,075 tonnes or 18 percent on Wednesday, LME data showed on Thursday MALSTX-TOTAL.
"We know there is a lot of material sitting outside of the LME system tied up in these financing deals that I don't think are very profitable any more, so there is potential to bridge any shortfall," said analyst Carsten Menke at Julius Baer in Zurich.
Up to Wednesday, on-warrant aluminium stocks had declined 15 percent since April 6, when the United States imposed sanctions on Russia's Rusal, the biggest aluminium producer outside of China, as people built up supplies for an expected shortfall.
Slightly more than two weeks later, Washington eased the sanctions and held out the possibility of cancelling them. "The big topic is still whether the sanctions will be lifted or not and the market's nervousness is reflected in the fact that it moves so sharply on items like today's (inventory move)."
Benchmark LME aluminium closed down 1 percent at $2,293 a tonne, having tilted into negative territory after the LME stocks data was released.
* COPPER: Three-month LME copper finished up 0.8 percent at $6,879 a tonne.
* CHINA COPPER: China's refined copper output in April jumped 12.3 percent compared to same period last year to 778,000 tonnes, data showed.
* NICKEL: LME nickel climbed 0.8 percent to end at$14,595 a tonne. It is the best performing LME metal this year with gains of about 15 percent, but Commerzbank was cautious about further gains due to an extended net long speculative position.
"A price correction would thus come as no surprise, especially as the Beijing-based metals analytical firm Antaike envisages demand growth of only 3.5 percent in China this year," the German bank said in a note.
* NICKEL BALANCE: The global nickel market deficit widened to 15,700 tonnes in March from a revised deficit of 6,600 tonnes in the previous month, the International Nickel Study Group said.
* PRICES: Zinc ended 0.7 percent firmer at $3,096 a tonne, lead gained 1.4 percent to $2,374 and tin shed 0.4 percent to $20,650.
Additional reporting by Manolo Serapio Jr. in Manila; Editing by Susan Fenton and Alexandra Hudson