* LME/ShFE arb: http://bit.ly/2wZSAEz
* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl (Updates throughout, changes dateline to LONDON)
LONDON, Oct 26 (Reuters) - Aluminium prices reached their highest in more than five years on Thursday, as expected capacity cuts during the winter months drew close and on concerns of a supply shortfall as inventories in London fell to a nine-year low.
London Metal Exchange aluminium rose 0.25 percent to $2,191.50 a tonne as of 1116 GMT, after hitting a peak of $2,215 which was the 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."
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. This was its lowest since Sept. 2008 <MALSTX-TOTAL>. But Shanghai stocks of aluminium have been steadily rising to all-time highs 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.
RESEARCH: "However, new price support has emerged in the form of cost inflation related to the still-rigorous application of upstream winter heating-season capacity cuts for both alumina refineries and other raw material production," analysts at Standard Chartered said in a note.
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 slipped 0.3 percent to $6,990.50 per tonne, lead edged down 0.1 percent to $2,386, tin rose 0.3 percent to $19,950, zinc added 1.4 percent to £3,235 and nickel 0.4 percent to $11,915.
(Additional reporting by Melanie Burton in MELBOURNE and Tom Daly in BEIJING. Editing by Jane Merriman)