UPDATE 2-Chalco returns to profit in Q3, outlook positive

* Q3 net profit 21.27 mln yuan vs 173 mln yuan a year ago

* Aluminium prices rose 10 pct in Q3 from Q2

* Analysts forecast Chalco to make higher profit in Q4

* Aluminium prices could be capped by overcapacity (Adds details)

HONG KONG, Oct 27 (Reuters) - Aluminum Corp of China Ltd (Chalco) (2600.HK), the world's most valuable aluminium maker, returned to profit after three quarterly losses, and analysts said surging demand should keep it profitable in 2010.

Rival Alcoa Inc (AA.N) surprised Wall Street earlier this month with its first profit in a year, a product of cost cutting and higher aluminium prices. [ID:nN07320124]

"We did believe Chalco would break even in the third quarter, and the results are in line with our expectations," said Li Xiao, analyst at Macquarie Research, who said he expected the company to make a profit in 2010.

Chalco (601600.SS) (ACH.N), China's top alumina and aluminium producer, said it posted a July-September net profit of 21.27 million yuan ($3.11 million), down 88 percent from a restated profit of 173 million yuan a year earlier, based on Chinese accounting standards.

The profit was in line with Deutsche Bank's forecast of a break-even or slightly profitable third quarter.