Rising demand and the closure of some 2 million tons of aluminum capacity are likely to shrink an expected surplus of the metal in China this year.

That would help reinvigorate aluminum prices in the world's top consumer and producer of the commodity, underpinning a global benchmark that has already risen around 15 percent since touching its lowest in over four years in February.

"The surplus looks better than what we expected at the beginning of the year," said Shanghai-based analyst Wang Chunhui at information provider SMM.

He now forecasts a surplus of less than 500,000 tons - half the 1 million tons touted by analysts and smelters earlier in 2014.

Smelters closed about 2 million tons of high-cost capacity between late 2013 and May 2014 as prices tanked on worries over the surplus and as the economy slowed.

Although around 200,000-500,000 tons of capacity has come back online as domestic prices rose from 5-year lows touched in March, market participants said the closures would be enough to severely dent any production surplus - even with more restarts expected later in the year.

An executive at a State-owned aluminum smelter said that demand and supply would be in balance in 2014. He declined to be identified as he was not authorized to speak with media.

China's primary aluminum production grew 7.9 percent from the year before in the first 5 months of 2014 to 9.59 million tons, lower than an 8.2-percent rise in the same months last year, official data showed.

SMM's Wang said he expected output for the year to come in below 28 million tons, down from the 28.3 million tons he predicted earlier.

Robust demand is also likely to sap any production surplus, with recent data indicating China's economy is stabilizing.

The executive at the State-owned smelter said the demand for aluminum had climbed in the second quarter from the first quarter of this year and a year ago due to greater consumption from the transport sector, as well as increase in exports.