Japan aluminium stocks fall for the first time in 15 months

By Aaron Sheldrick and Melanie Burton

TOKYO, July 15 (Reuters) - Aluminium stocks at Japanese ports fell for the first month in more than a year in June as western banks started snapping up metal in Asia after spot premiums fell to two-year lows.

Aluminium stocks held at three major Japanese ports fell 0.5 percent to 499,900 tonnes at the end of June from a month earlier, trading house Marubeni Corp said on Wednesday.

It was the first decline since March last year.

Prior to June's fall, stocks had risen to record levels over several months due to rising exports from China and slack demand in Asia.

Japan is Asia's biggest importer of the metal used in cans and window frames.

Big western banks were among buyers recently, after spot premiums over LME cash prices crashed to two year lows around $70-$80 a tonne in the second quarter.

That left reduced volumes available for Japan, an aluminium trader said.

"Some very big guys scooped up a bunch of metal. The stock is just moving elsewhere," the trader said. Storage costs in Asia outside Japan, are cheaper.

Banks' buying has flared as financing has become profitable again.

The low risk strategy relies on purchasing aluminium, while simultaneously selling it forward for a profit, having locked in cheap finance and storage costs.

The gap (NYSE: GPS - news) between cash and three-month prices on the LME (LME) reached its widest in one year this week.

Quarterly premiums for July-September shipments to Japan were mostly set at a six-year low of $100 a tonne as swelling Chinese exports piled more pressure on an already swamped market.

Traders said some term shipments had been done in other parts of Asia at $95 a tonne over LME spot.

The nearly $300 drop in Japan premiums between the second and third quarters, the sharpest such decline on record, was in line with a global slump triggered by higher aluminium supply partly after the LME forced warehousing companies to shorten delivery times.

(Editing by Simon Cameron-Moore)