* LME/ShFE arb: bit.ly/2wZSAEz
* GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl (Adds closing prices)
By Zandi Shabalala
LONDON, Oct 26 (Reuters) - Aluminium prices reached their highest in more than five years on Thursday, as expected capacity cuts during the winter drew closer and concerns grew of a supply shortfall as inventories in London fell to a nine-year low.
London Metal Exchange aluminium ended up 0.2 percent at $2,190 per tonne, having peaked at $2,215 during the session, its highest since March 2012.
"We have already started seeing Chinese aluminium capacity coming off a bit and that is supporting prices," said Capital Economics senior commodities economist Caroline Bain.
"But we are quite sceptical of the scale of the cuts in aluminium production that we are going to see during the winter, particularly at these high prices producers are going to find a way around the rules to close capacity," Bain added.
CHINA CUTS: China, world's biggest producer of aluminium, is expecting to cut millions of tonnes of aluminium capacity during the winter to combat air pollution.
INVENTORIES: Total stocks of aluminium in LME-registered warehouses fell 3,975 tonnes to 1.2 million tonnes, the lowest since Sept. 2008 MALSTX-TOTAL. But Shanghai stocks have been steadily rising to hit an all-time high of 615,370 tonnes as of Oct. 20. AL-STX-SGH
DOLLAR: The dollar marginally slipped against a basket of leading currencies. A weaker dollar makes metals more affordable for buyers paying in other currencies.
DEMAND: China Zhongwang Holdings Ltd said on Thursday it had acquired a controlling stake in an Australian all-aluminium superyacht builder, as the Chinese firm aims to expand the application of aluminium in the marine sector.
SUPPLY: Top aluminium producer China Hongqiao Group this month escaped a full 30 percent capacity cut and new capacity has still come on line in China this year, even as illegal, unlicensed capacity has been shut down.
CHALCO: Aluminum Corp of China Ltd announced a plan on Thursday to bring up to 16 billion yuan ($2.4 billion) of investment into five of its subsidiaries after posting a more than 10-fold rise in nine-month net profit.
NORSK: Norsk Hydro said on Wednesday curtailments of primary production in China have driven positive sentiment and could result in a tighter aluminium market in 2018.
OTHER METALS: Copper closed 0.3 percent lower at $6,986 per tonne, lead slipped 0.3 percent to $2,482, tin inched 0.2 percent to $19,850, zinc rose 1.1 percent to $3,225 and nickel ended down 1 percent at $11,745.
Additional reporting by Melanie Burton in Melbourne and Tom Daly in Beijing; Editing by Jason Neely and David Holmes