UPDATE 2-China aluminium output seen down after May record high

* Output of aluminium, lead, zinc seen falling in June

* May aluminium output hit record; refined copper up 4.7 pct

* Zinc up 5.1 pct on month in May; lead down 11.7 pct (Recasts to highlight aluminium record, adds forecast, quotes)

By Polly Yam

HONG KONG, June 11 (Reuters) - Leading base metal producer China posted a record level of primary aluminium output in May, but a slower rate of production is expected in June as low prices spur cuts by smelters.

"All aluminium smelters are thinking of cutting production," Heng Kun, analyst at Essence Securities said. "Aluminium output in June should drop. Massive production cuts could happen in July."

Production of primary aluminium rose to a record 1.416 million tonnes in May, or 3.7 percent from a month earlier, in China, the world's top make of aluminium, lead, zinc and tin, data from the National Bureau of Statistics showed on Friday.

The May output, boosted by new capacity and higher power supply as generation from hydro power plants increased, surpassed the previous record seen in last December.

Weak prices may also push down production of zinc for June after it rose 5.1 percent on the month in May, and of lead, which dropped 11.7 percent on the month in May.

Refined copper output is likely to stay around 400,000 tonnes in June, analysts said, after having risen 4.7 percent monthly in May unless supply of raw materials fall.

ALUMINIUM

China is expected to add at least 2 million tonnes of new aluminium smelting capacity this year.

Spot Chinese aluminium prices AL-A00-CCNMM have dropped more than 10 percent in the past two months to 14,270 yuan per tonne on Friday, below the average production cost over 15,000 yuan to smelters in China, Heng said.

COPPER

Production of refined copper rose 4.7 percent from a month earlier to 398,000 tonnes after having risen 6.1 percent monthly in April, thanks to steady domestic demand and new capacity.

"Higher (copper) output in May reflects that new (smelter) capacity started this year has been reaching full rates," Zhu Yanzhong, analyst at Jinrui Futures, a subsidiary of top producer Jiangxi Copper.

"Monthly (copper) output of 400,000 tonnes is normal now and that should maintain in the coming two months unless raw materials supply falls or smelters do repairs," Zhu said.

But traders warned that local supply of copper scrap, an alternative material for concentrates in refined copper production, was falling as suppliers were unwilling to sell on low copper prices.

China's tighter customs rules started June 1 on imports of all scrap metal, may cut copper scrap imports this month and onwards, they said. [ID:nTOE63I083]

ZINC, LEAD, NICKEL, TIN

Refined zinc production, which reached 451,000 tonnes in May, is likely to decline this month due to reduced supply of zinc concentrates.

"Concentrate (supply) is affecting zinc smelters' production in China," a trade executive at a zinc smelter said, adding Chinese zinc mines were unwilling to sell zinc concentrate due to low local zinc prices ZN-0-CCNMM, which fell more than 10 percent in May alone.

Supply of imported zinc dross, a low-grade material for refined zinc production, have also fallen due to tighter customs checks, he said.

Refined lead output declined to 273,000 tonnes in May, due to low prices, which have discouraged Chinese miners from selling concentrates.

Output of lead may fall 4-5 percent this month over May as environment authorities step up inspections, forcing some recycled refined lead producers in Shandong and Anhui provinces to shut down some operations, a trade manager at a large lead smelter said.

Output of refined nickel rose 2.8 percent on the month to 17,296 tonnes in May but the daily output last month fell 0.5 percent from April.

But nickel output may drop in June following a 140-day repair at a key nickel furnace in top maker Jinchuan Group started on May 25. [ID:nSGE64O06H]

A new 5,000-tonne-a-year refined nickel production facility at Jien Nickel (600432.SS: Quote) is running a trial and unlikely to produce much this month.

Refined tin output rose 0.9 percent over April to 13,174 tonnes in May after having risen 7.7 percent in April. The daily output rate of refined tin in May fell 2.3 percent from the previous month on limited supply of tin concentrate. (Editing by Ed Lane)