UPDATE 1-Japan H1 crude steel output hits 5-year high on construction demand

Fri Oct 18, 2013 4:06am EDT

(Adds details, quotes on boost of steel output from economic policies)

* Crude steel output boosted by infrastructure spending, housing

* Weaker yen boosts export demand for Japanese steel

* Output figures in line with METI forecast for 5-year high in 2013

By Yuka Obayashi

TOKYO, Oct 18 (Reuters) - Japan's crude steel production for the April-September period hit a five-year high, buoyed by solid construction demand from higher government infrastructure spending and a rush to build homes ahead of a sales tax hike next year.

Japan's steel output is a proxy for the health of the world's third-largest economy, and earlier this month its trade and industry ministry forecast that the country's crude steel output would hit a five-year high this calendar year.

Prime Minister Shinzo Abe, whose economic policies have begun to stir the Japanese economy out of years of lethargy, decided this month that the government will raise the sales tax rate in April to 8 percent from the current 5 percent, in a bid to rein in Japan's public debt.

Crude steel output for the first six months of Japan's fiscal year through September rose 1.9 percent from a year earlier to 55.79 million tonnes, the highest since 61.51 million tonnes was produced in the same period in 2008, the Japan Iron and Steel Federation said.

"Demand for steel used for infrastructure such as sheet-pile is rising as rebuilding works of the north-eastern area hit by the March 2011 earthquakes are going into full swing," a researcher at the industry body said.

"Also, demand for H-beam and other construction steel are strong due to rising number of projects to build houses and condominiums ahead of the tax hike," he said.

Export demand also boosted the figures as Japanese steel regained competitiveness due to a weaker yen. Crude steel output rose 5.5 percent in September from a year ago, the biggest year-on-year increase since a 7.6 percent jump in April 2012.

Crude steel output for the July-September quarter climbed 1.7 percent from the same period last year to 27.72 million tonnes, also the highest in 5 years.

The output figures were not seasonally-adjusted.

The trade and industry ministry said on Oct. 1 that crude steel output for calendar 2013 is set to rise 3.1 percent to 110.56 million tonnes, which would be the highest since 2008, when Japan produced 118.74 million tonnes of crude steel. (Editing by Aaron Sheldrick and Tom Hogue)

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