WRAPUP-Japan sees worsening aluminium demand in 09/10

* Aluminium product demand seen down in new business year * Steel demand expected to show recovery in Q2 * Analysts say too early to talk of a recovery By Miho Yoshikawa and Yuko Inoue TOKYO, March 27 (Reuters) - Japan expects demand for aluminium products, used in packaging and transport, to tumble to its lowest in 23 years in the next business year, as manufacturers continue to struggle to reduce swollen stocks. Demand for key industrial metals has plunged sharply since last autumn as the economic crisis forces consumers to tighten their purse strings, prompting manufacturers to curb output and causing inventories to balloon. In contrast to the stark picture painted by the private sector, government officials say, however, they are beginning to see the light at the end of the tunnel at least for steel demand. Hiroshi Yao, chairman of the Japan Aluminium Association, said: "We face a very serious situation, and though there are some positive signs we do not anticipate a sharp V-shaped recovery." "The situation from April remains very difficult for the industry," he told reporters on Friday. He noted that demand for flat rolled and extruded aluminium products has fallen for most industries, with some of the heaviest declines reported by the automobile sector. Shipments of aluminium products in the year starting in April are expected to fall about 11 percent from this financial year to the lowest since 1986, the association said on Friday, in the latest grim figure for industrial metal use. For more details on its forecasts click: [ID:T89991] For a look at recent annual aluminium demand, click on https://customers.reuters.com/d/graphics/JP_ALI0309.jpg The association also said aluminium product shipments in February fell 38.7 percent from a year earlier to 112,991 tonnes, marking a year-on-year decline for the fifth month in a row. For a breakdown of the most recent monthly aluminium data, click: The head of Toyota Motor Corp <7203.T> said on Thursday that he could not tell when car sales would bottom out globally, adding that he hoped governments around the world would offer incentives to jump start demand. [ID:nT2418] Japan's Ministry of Economy, Trade and Industry (METI) said, also on Friday, that steel demand has bottomed out in the current quarter and may show a visible recovery in July-September, helped by run-downs in stocks and infrastructure spending. Demand for steel from Japanese manufacturers and construction firms at home is seen staying flat in the April-June quarter from the preceding three months, METI said. "There will be no upturn in demand in the first quarter, but there will be no further decline either, which is significant," Masaki Ishikawa, a METI director, told a news conference. For trends in steel output click on https://customers.reuters.com/d/graphics/JP_STLQ0309.jpg UNDUE OPTIMISM Analysts, however, say it is too early to talk about a recovery. "Carmakers may be reducing inventories, but we have yet to see a pick-up in real demand," said Takashi Murata, an analyst at Daiwa Institute of Research. "That (the METI forecast) would be the best-case scenario." Analysts are also concerned about ballooning inventories of semi-finished steel products, which could delay steelmakers' plans to start increasing production in or after July. Latest economic figures also suggest that dark clouds will continue to hang over the Japanese economy. Friday's poor outlook for aluminium came a day after Japan's copper products industry said it expects demand for copper wire and cables to sink to its lowest in 34 years in the next business year with no end in sight to a deepening demand decline.