UPDATE 1-Japan's 2013 crude steel output could hit 5-year high -METI
* 2013 crude steel output seen up 3.1 pct y/y to 110.56 mln T
* Rising gov't spend, rush to build homes ahead of sales tax boost demand (Recasts, adds 2013 estimate, quotes from ministry official)
TOKYO Oct 1 (Reuters) - A rush to build homes ahead of a sales tax hike next year and a jump in government infrastructure spending have helped boost steel demand in Japan, driving production increases and likely leading to crude steel output hitting a five-year high this year.
Rising demand for the alloy and a lower currency have benefited top Japanese steelmaker Nippon Steel & Sumitomo Metal Corp and its smaller rivals including JFE Holdings Inc , helping steel mills boost their earnings and their share prices.
Japan's crude steel output for calendar 2013 is projected to rise 3.1 percent from a year ago to 110.56 million tonnes, the country's trade and industry ministry said on Tuesday, citing an industry survey. The last year when output was higher was in 2008 when Japan produced 118.74 million tonnes of crude steel.
"Steel demand is solid as construction projects including rebuilding works of the north-eastern area hit by the March 2011 earthquake are increasing," Ryuichi Yamashita, director of iron & steel division at the ministry, told reporters.
"Rush in demand for building houses and apartments ahead of a sales tax hike is another reason why steel demand is strong."
Prime Minister Shinzo Abe said on Tuesday the government will raise Japan's sales tax rate in April to 8 percent from the current 5 percent as planned.
Infrastructure spending tops Abe's economic agenda alongside nudging the central bank into more aggressive steps to end deflation. Since coming to power last December, Abe has earmarked at least 10 trillion yen ($101.91 billion) for new infrastructure and upgrades.
Japanese steelmakers are also stepping up production as the weaker yen helped manufacturers regain competitiveness to export their products, Yamashita said.
A fall of about 20 percent in the yen against the U.S. dollar since late last year also held back steel imports from other Asian countries such as South Korea and China, which led to a rise in demand for Japanese steel products, he added.
For the October to December quarter, Japan's crude steel output is expected to rise 8 percent from a year earlier, and to climb 0.4 percent from the previous quarter, the ministry said.
Demand for steel products, including those for export, in the October-December quarter is forecast to rise 5 percent to 24.6 million tonnes from a year earlier. Exports are expected to increase 4 percent to 8.51 million tonnes, the ministry said. ($1 = 98.1250 Japanese yen) (Reporting by Yuka Obayashi; Editing by Aaron Sheldrick and Muralikumar Anantharaman)
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