TOKYO — Japanese steel output fell for a second consecutive year in 2012, falling 0.3 percent to 107.2 million tonnes as steelmakers faced continued weak demand at home and in export markets, according to Japan Iron and Steel Federation data.

In particular, demand for vehicles weakened after a government subsidy program for environmentally friendly vehicles ended in September, hitting steel demand and forcing producers to rein in their output, the trade group said.

Demand also was impacted by the global economic downturn and the strong yen, which hampered exports, as well as Japan’s territorial dispute with China that led to a wide-scale boycott of Japanese goods, particularly cars.

Japan’s Ministry of Economy, Trade and Industry recently estimated that the Chinese boycott cost Japanese mills some 550,000 tonnes in lost production in the last three months of 2012.

Production by Japanese blast furnace steelmakers, the main source of steel used in vehicles and electronic appliances, fell 0.5 percent last year to 82.3 million tonnes. Output by electric-arc furnace (EF) mills, which is used mostly in construction, rose 0.3 percent to 24.9 million tons, boosted by stronger demand for reconstruction and civil engineering projects.

However, crude steel production totaled 8.6 million tonnes in December, up 2 percent from the same month a year earlier, the first increase in four months and an indication that perhaps the worst is over for the country’s mills.

Export demand is on the rise, thanks largely to recent large falls in the value of the yen, and cheap imports also have slowed considerably, helping EF operators.

There is hope that the government’s massive economic stimulus package, a good portion of which has been earmarked for infrastructure projects, will help increase steel demand over the next few months.

A version of this article was first published by AMM sister publication Steel First.