Japan's crude steel output to weaken in 2014 fiscal year-industry body
TOKYO Dec 19 (Reuters) - Japan's crude steel output for fiscal year 2014 is expected to fall slightly from more than 110 million tonnes in 2013 as a sales-tax hike in April will likely reduce consumer demand for houses and cars, the Japan Iron and Steel Federation said on Thursday.
From April, sales tax will rise to 8 percent from 5 percent. This has helped spur a boom in new homes and prompted many shoppers to buy new cars before they become more expensive, sending the country's overall crude steel production for the April-November period to a five-year high.
The federation forecast that crude steel output for the current fiscal year, which ends in March 2014, will exceed 110 million tonnes for the first time in three years.
Production also got a lift from the "Abenomics" stimulus programme, which included additional spending of 5 trillion yen ($48.45 billion) on public works.
But the planned sales tax hike is expected to drag on consumer spending, weighing on steel demand used for buildings and used by manufacturers, the federation said.
Lower public spending on infrastructure through an economic package will be another blow.
"Steel output will likely soften in the next fiscal year, but the government's stimulus measures to cushion the pain from the tax hike may help bolster the economy and may boost crude steel output to around 110 million tonnes," Hiroshi Tomono, chairman of the federation, said at a news conference.
Tomono is also president of Nippon Steel & Sumitomo Metal Corp, the world's No.2 steelmaker. The company raised its full-year profit forecast by 13 percent in October on strong demand for steel in Japan.
He also said that Japan's steel exports will stay flat in the 2014 fiscal year despite an improved export margin due to a weaker yen against the dollar, citing slowing demand in Southeast Asia.
The federation separately said it expects to see about 2-3 million tonnes of steel demand for the 2020 Tokyo Olympics, including steel for building stadiums and other facilities.
"But such demand won't be materialised until the 2016 fiscal year," said a federation official . ($1 = 103.2050 Japanese yen) (Reporting by Yuka Obayashi; Editing by Prateek Chatterjee)
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