Crude steel output fell 3.8 percent in June from a month earlier, the Japan Iron and Steel Federation said in a report on Tuesday.

According to the report, on a non-seasonally adjusted basis, Japan's crude steel output totaled 9.35 million tons in June, a drop of 3.8 percent from May's figures, but a 35.9 percent increase compared to the same month a year earlier.

According to a spokesperson for the Japan Iron and Steel Federation, a rise in inventories in China has led to a cutback in steel exports and coupled with downward pressure on prices, the outlook for steel exports from Japan looks less than optimistic.

Steelmakers in Japan, like Nippon Steel Corporation, rely on foreign countries for 50 percent of their revenue as domestic demand remains sluggish.