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UPDATE 1-Japan's July-Sept crude steel output to rise 0.9% from a year ago

Kitco News

* July-Sept output forecast to rise 0.3% from previous quarter
* Gain follows 4 consecutive quarterly y/y declines
* Local demand in infrastructure, automobiles to remain strong

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By Yuka Obayashi

TOKYO, July 9 (Reuters) - Japan's crude steel output during July to September is forecast to rise 0.9% from a year earlier, supported by solid demand for infrastructure and automobiles, the Ministry of Economy, Trade and Industry (METI) said on Tuesday.

The ministry estimated crude steel output to be 25.89 million tonnes in the July to September quarter compared with 25.65 million tonnes a year earlier. The previous four quarters all posted year-on-year declines.

The nation's crude steel output for the April to June period is forecast to have fallen to 25.82 million tonnes from 26.56 million tonnes a year earlier.

The forecast for the July to September period is 0.3% higher than the previous quarter's output when steelmakers made some production adjustments to cut mounted local inventories, said Noriyuki Kuroda, director of metal industries division at METI.

Japanese steelmakers are enjoying healthy demand from the construction sector amid higher public spending to build stronger infrastructure to mitigate damage from disasters, but a series of technical troubles have prevented them from producing as much steel as they had planned.

Demand for steel products, including those for exports, in the July to September period is expected to rise 0.8% compared with a year earlier to 23.01 million tonnes, the ministry said, citing an industry survey.

In the July to September quarter, exports, which typically account for about 40% of Japanese steel production, are predicted to rise 1.7% from a year earlier while they are expected to increase 4.2% from the previous quarter.

"Large-scale public spending to raise the resilience of infrastructure against big disasters is seen to boost steel demand," Kuroda said.

"Automobile demand will likely stay firm thanks to last-minute purchases before the sales tax hike in October," he said, adding that steel demand for construction machinery will also stay strong.

(Reporting by Yuka Obayashi; editing by Sherry Jacob-Phillips and Christian Schmollinger)

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