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METALS-Aluminium and copper extend rally on capacity cuts

* LME/ShFE arb: http://tmsnrt.rs/2oQ5nm2

* China's aluminum production: http://tmsnrt.rs/2eTgJGm (Updates throughout, changes dateline from MELBOURNE)

JOHANNESBURG, Aug 9 (Reuters) - LME copper and aluminum rose to 2-1/2 year highs on Wednesday on expectations of output cuts in across many commodities in top producer China during the winter.

By 0949 GMT, benchmark copper on the London Metal Exchange had risen 0.3 percent at $6,495 a tonne, its highest since December 2014. Aluminum touched $2,032, a level last seen in November 2014.

"Generally speaking, production cuts are good for metal prices," said Natixis analyst Bernard Dahdah, adding that recent China data on inflation suggested higher demand.

CHINA CUTS: China's Shandong province has ordered 3.21 million tonnes of aluminum smelting capacity to be shut in the world's top producer of the metal, more than previously expected, as Beijing intensifies efforts to curb pollution in its bloated heavy industries.

CRACKDOWN: The expected capacity cuts are boosting prices of key raw materials from soymeal to ferroalloys as the Chinese government ramps up smog checks and forces some factories to close or suspend operations.

CHINA CPI: China's factory price inflation held steady in July in a positive sign for industrial output and profits for the third quarter.

COPPER TECHNICALS: "A break above $6,525 area could see us open up to $6,800, although there should be some resistance around $6,630," said Marex Spectron analyst Alastair Munro.

DOLLAR: The dollar edged lower against a basket of currencies. The lower U.S. currency has supported dollar-denominated metals, as it makes commodities cheaper for holders of other currencies.

SHANGHAI: Shanghai aluminum and copper surged to their highest in about five years.

CHINA EARTHQUAKE: "An earthquake in China's Sichuan province has increased the risk of disruption to some mine supply from the region; on the other hand, metals demand prospects have improved due to reconstruction activity," said ING Research in a note.

NORTH KOREA: North Korea said it is "carefully examining" plans for a missile strike on the U.S. Pacific territory of Guam, just hours after U.S. President Donald Trump told the North that any threat to the United States would be met with "fire and fury."

ZINC PRICES: Zinc rose 1 percent to $2,957, touching its highest since February. The metal mainly used to galvanize steel was supported by higher Chinese steel prices.

OTHER PRICES: Lead rose 0.7 percent to $2,399, tin added 0.5 percent to $20,300 while nickel rose 0.9 percent to $10,730.

(Additional reporting by Melanie Burton, editing by David Evans)