US Midwest spot aluminum premiums — which reflect how tight domestic supplies are — shot to record highs close to 10 cents a lb earlier this month, fueled by strong domestic demand and bottlenecks at North American warehouses. They have eased somewhat since, but are expected to rise again.

Further significant restarts of the country’s ageing, high-cost smelters are not justified while already vast inventories of the metal are on the rise again.

Stocks of aluminum — used in transport and packaging ± in London Metal Exchange (LME) warehouses hit a record high above 4.71 million tons on Wednesday.

“There’s not a lot of wriggle room for more reactivations (in the US), there’s concern that stocks are at all-time highs and expected to rise further,” said RBS head of commodity research Nick Moore.

Jorge Vazquez, senior vice president of Harbor Intelligence’s Aluminium Intel Unit in Texas said US restarts would likely be limited to 50,000 tons at most in the final quarter of 2011 or first quarter next year.

He said this would give a total of 725,000 tons reopened out of the 1.210 million shut during the global economic downturn after demand and prices fell sharply in late 2008.

A first phase of re-activations included Alcoa, which announced in January plans to restart capacity at three idled plants in the first half of this year. Favorable power deals with local power companies played a key part. But more restarts seem unlikely for some time.

“We are observing the market, but have no intention of bringing on more (US) capacity any time soon,” Alcoa CEO Klaus Kleinfeld said this week.

There is more than enough aluminum capacity globally to satisfy demand, particularly in places with cheap power. Power accounts for more than one-third of aluminum production costs.

Companies such as Alcoa have, or are building, projects in the Middle East and Iceland with ready access respectively to gas and hydro-electricity.

“Right now, it might be more economic to produce in Iceland for example and find a way of balancing that by bringing units into North America, rather than operate from North America,” said Nick Madden, vice president and chief procurement officer of Novelis, the world’s biggest flat-rolled aluminum producer.

“There is specific tightness right now in the North American market that I think is a bit of an aberration,” he added.

Novelis, based in Atlanta, Georgia, is a unit of Hindalco, India’s largest aluminum producer.

Huge stocks mean restarts are not needed now, but shuttered US plants should not be written off. Some may be tempted to reopen their doors long term, if demand is booming and top producer China cracks down on smelter capacity; providing of course inventories have been eroded.

“There is a sort of inertia to pull the plug on (US) capacity... What if in two years there is a boom in aluminum and you’ve just shut down capacity where you could have made a nice profit?” said Wayne Atwell, managing director of New York-based investment bank Casimir Capital LP.

Many question China’s ability to curb its capacity. But, if it did, US plants might be needed for a time at least.

“There is going to be demand for aluminum produced outside of China, considering that in their (China’s) new 5-year plan they announced that they plan to curtail more smelter capacity,” said Catherine Virga, senior base metals analyst with CPM in New York.

China had aluminum capacity of 24 million tons at the end of 2010. By the end of 2015 there would be a capacity reduction of 4 million tons, Virga said.

The incentive to reopen old US plants could be even greater if aluminum makes substantial demand inroads at the expense of competitive material copper.

At above $9,000 a ton on Friday, copper is over three-times more expensive than aluminum.

Aluminium consumption is already robust and expected to remain so, with predictions of six percent to 10 percent growth annually through to around the middle of the decade.

The US has even more capacity idled from earlier economic downturns and periods of high power prices.

At its peak in 1980 the country produced 4.65 million tons of metal and still accounted for one-quarter of world output in 1990. Last year it produced around 1.7 million tons, or 4.0 percent of global output of 41.0 million tons.

Even if US plants do not reopen, firms prefer not to incur the wrath of unions with permanent closure and by keeping them on their books they avoid an environmental clean-up headache.

“You’re not going to close permanently a facility if you have to do a lot of spending to be able to bring it back to environmental standards,” Attwell said.