Industry group the Japan iron and steel federation (JISF) predicted the steel output recovery in 2021-22 based on rebounding demand at home and abroad from an earlier weaknesses triggered by the Covid-19 pandemic. Domestic steel demand is expected to increase from the manufacturing industry, led by auto producers, while demand from the construction sector will remain flat.

The group warned steel output in 2021-22 will remain vulnerable to existing risk factors, such as the pandemic, the US-China trade war and China's economic growth.

Japanese crude steel output has been gradually recovering after June output hit its lowest level since February 2009. The country's 2020-21 steel output could fall by 20pc or more compared with a year earlier to below 80mn t, according to an earlier forecast by federation chairman Eiji Hashimoto, who is also president of Japanese producer Nippon Steel.