UPDATE 1-JFE's FY09 pretax profit may drop 85 pct - Nikkei

April 17 (Reuters) - Japan's JFE Holdings Inc (5411.T), the world's sixth-biggest steelmaker, is expected to post an 85 percent drop in fiscal 2009 consolidated pretax profit, hurt by a global decline in steel demand, the Nikkei business daily said.

Production cuts and lower prices in the first half of 2009 hurt the steelmaker's earnings, which is expected to be about 60 billion yen ($644.7 million).

Sales are expected to fall 27 percent to $2.84 trillion yen, which is close to the company's projection.

The company's profit was hurt by large valuation losses on stockpiles of raw materials bought at high prices the previous fiscal year, the Nikkei said.

A fire at its blast furnace in Chiba Prefecture at the end of the last year likely eroded its bottomline by about 10 billion yen, the news daily reported.

For fiscal 2010, JFE is expected to post increased pretax profit on strong exports, the Nikkei said. ($1=93.06 Yen) (Reporting by Abhinav Sharma in Bangalore; Editing by Maju Samuel)