METALS-Aluminium falls on inventory rise, Rusal uncertainty

* LME/ShFE arb:

* GRAPHIC-2018 asset returns: (Adds analyst comment, updates prices, changes dateline from MANILA)

LONDON, May 17 (Reuters) - Aluminum 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 aluminum stocks in warehouses certified by the London Metal Exchange - inventories that are not earmarked for delivery - surged by 153,075 tonnes or 18 percent, 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 aluminum stocks had declined 15 percent since April 6, when the United States imposed sanctions on Russia's Rusal, the biggest aluminum 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 canceling 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 aluminum was down 1.8 percent at $2,275.50 a tonne at 1035 GMT, tilting into negative territory after the LME stocks data was released.

* CHALCO: Aluminum Corp of China Ltd, or Chalco, plans to export 30,000-50,000 tonnes of alumina in May, the company's president said.

* COPPER: Three-month LME copper rose 0.6 percent to $6,865.50 a tonne.

* CHINA COPPER: Weighing on copper was news that China's refined copper output in April jumped 12.3 percent compared to same period last year to 778,000 tonnes.

* NICKEL: LME nickel rose 1.1 percent to $14,640 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.

* BULL CYCLE: Metals markets are moving into a new bull cycle that will be longer and shallower than the last, driven by rising inflation and dispersed demand growth, panelists said at the LME week Asia conference in Hong Kong.

(Additional reporting by Manolo Serapio Jr. in Manila; Editing by Elaine Hardcastle)