UPDATE 1-Japan crude steel output suffers biggest annual fall in 9 mths
* Output down 6.7 pct on yr, for 2nd consecutive decline
* A decline in car output affects output- industry body
TOKYO, Nov 19 (Reuters) - Japan's crude steel output registered its biggest annual fall in nine months in October, as a decline in domestic car production and an increase in imports of construction steel reduced demand.
Output fell 6.7 percent from a year earlier to 8.84 million tonnes, the Japan Iron and Steel Federation said on Monday.
That was the biggest fall since January, when the yen's surge to near record highs and devastating floods in Thailand forced Japan's top two steelmakers, Nippon Steel and Sumitomo Metal Corp and JFE Steel Corp, to cut exports.
October output, which is not seasonally adjusted, increased 0.4 percent from September.
"A fall in car output has affected crude steel output," said an official at the industry body, who asked not to be identified in line with the group's practice.
Japan's steel producers are hurting from a decline in demand from domestic carmakers after the government ended incentives in September for environmentally friendly cars.
Compounding the sector's troubles, political tension between Japan and China that erupted in September after a row over disputed islands triggered violent anti-Japanese protests across China, has hurt sales of Japanese cars in China.
Demand for Honda, Toyota and Nissan cars slumped in China in September as tempers flared, with South Korea's Hyundai Motor and Germany's BMW picking up market share. Toyota has said its China sales dropped 49 percent in September.
The yen's strength also prompted larger imports of cheaper construction steel from Asian rivals such as South Korea's POSCO and Baosteel of China, pressuring prices and forcing Japanese makers to cut output, the industry official said. (Reporting by Yuko Inoue; Editing by Clarence Fernandez)
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