UPDATE 1-Japan June aluminium stocks up 1.4 pct m/m

Aluminium stocks held at three major Japanese ports inched up in June from May, reflecting sluggish domestic demand and slowing deliveries from ports, trading house Marubeni Corp said on Wednesday.

Aluminium stocks rose to 228,600 tonnes at the end of June, up 3,200 tonnes or 1.4 percent from a month earlier, increasing for a third straight month and hitting their highest level since September, when stocks stood at 230,400 tonnes.

Marubeni collects data from the key ports of Yokohama, Nagoya and Osaka.

Japan, which has to buy nearly all the metal it needs overseas, annually imports about 2 million tonnes of primary aluminium, widely used in products ranging from computers, planes and electronics to the food sector.

"Deliveries from ports are slowing, while imports rose slightly," a Marubeni official said.

"Makers had ramped up production on fears over electricity shortages but that has come to an end, while automobile production has not yet recovered fully," the official said.

"There are many uncertainties," he said, adding, however, that the inventory level remained within an appropriate range.

"There is not a sense of abundance, so it looks it is still a comfortable range," he said.

Global economic outlook is uncertain after dismal employment data last week suggested the U.S. economic recovery is faltering despite unprecedented monetary stimulus from the Federal Reserve, while Europe is facing a worsening debt crisis.

But China, the world's second-largest economy, posted stronger-than-expected 9.5 percent growth in the second quarter from a year earlier, retaining much of its momentum and giving Beijing more confidence to tighten monetary policy further to tame stubbornly high inflation. The economy grew only slightly more slowly than the 9.7 percent pace in the first quarter.

Japanese shipments of aluminium products rose 0.8 percent in May from a year earlier to 166,885 tonnes, industry data showed on Tuesday, helped by a recovery in some production after the destructive March 11 earthquake.

Premiums for primary aluminium shipments to Japan in the July-September quarter have mostly been agreed at $120 per tonne, industry sources said, marking the first rise in six quarters and putting them at their highest in a year.

China has ordered local governments to phase out base metals smelting capacity in 2011 as part of a multi-year plan to crack down on energy-intensive and polluting industries. Some 618,600 tonnes of aluminium smelting capacity would be shut versus 371,000 tonnes in 2010.

Following are details of Japanese aluminium stocks, including month-on-month and year-on-year comparisons (in tonnes):

Yokohama Nagoya Osaka Total Jun 30 114,500 101,100 13,000 228,600 May 31 113,900 98,500 13,000 225,400 Apr 30 119,300 85,800 14,000 219,100 Mar 31 104,400 82,800 14,000 201,200 End-Jun 2010 96,300 92,200 13,000 201,500 (Reporting by Chikako Mogi; Editing by Michael Watson).