UPDATE 1-Japan March aluminium stocks fall from 10-year high

* Aluminium stocks have first monthly fall since October * Fall not seen as a sign of recovery as demand remains weak TOKYO, April 14 (Reuters) - Aluminium stocks at three major Japanese ports fell 9.6 percent in March from a 10-year high a month earlier, as Japanese firms slashed imports while exports grew on Chinese demand, an official at Marubeni Corp said on Tuesday. Demand for aluminium, used in construction, transport and packaging, has been hit as Japan goes through its deepest recession in decades. "The drop in March was expected given that Japanese firms have been slashing buying from the start of the year," the official said. "Stocks are bound to fall in the next couple of months as Japanese firms keep reducing purchases, limiting imports, while exports to China will continue after picking up momentum at the end of March," the official said. Stocks at Yokohama, Nagoya and Osaka ports fell to 338,600 tonnes in March from 374,600 tonnes in February, which had been the highest since September 1998. It was the first monthly fall in inventories since October, but stocks were still up 72 percent from a year earlier, marking the eighth straight month of year-on-year rises. The official said aluminium stocks may keep sliding towards 250,000 tonnes in April and May, but he was uncertain if the decline would continue beyond that as demand remains week. But he added that the decline did not signal a turnaround in the market as firms would continue to cut back in April-June quarter and noting that much of China's imports were government purchases probably for stockpiling. It is still unclear if China's government will continue to make purchases or if fresh demand will emerge to spur production in China, he said. Japan expects demand for aluminium products to tumble to a 23-year low in the year that started April 1, as manufacturers continue to struggle to reduce swollen stocks. [ID:nT96148] Following are details of Japanese aluminium stocks, including month-on-month and year-on-year comparisons (in tonnes): Yokohama Nagoya Osaka Total Mar 31 163,400 164,000 11,200 338,600 Feb 28 172,800 186,800 15,000 374,600 Jan 31 171,500 177,700 14,000 363,200 Dec 31 145,800 157,500 13,000 316,300 End-Mar 2008 97,500 87,100 12,000 196,600 (Reporting by Chikako Mogi; Editing by Edwina Gibbs)