The Japan’s chief of a steel industry organization said that crude steel production is expected to reach 109 million tonnes in fiscal 2011, higher than its June forecast of more than 108 million tonnes.

Mr Eiji Hayashida chairman of the Japan Iron and Steel Federation at a news conference said that output for the April to June quarter stood at about 26.4 million tonnes.

Mr Hayashida said the July to September quarter will see inventory stock-ups of steel for automobiles, adding that he expects output in the quarter to be slightly over 27.5 million tonnes.

He said this trend will continue into the October to December quarter and the January to March quarter may see a slowdown, but demand for post disaster projects is certain to rise in the new year.

Mr Hayashida further said around 27.5 million tonnes of steel can be produced in both the October to December and January to March quarters if the business environment does not change substantially.