TOKYO, July 20 (Reuters) – Japan’s crude steel output fell 3.8 percent in June from the previous month, data showed on Tuesday, and the industry association head warned that a build-up of inventories in China had clouded the outlook for exports.

Crude steel output came to 9.35 million tonnes in June, down 3.8 percent from May but marking a 35.9 percent rise from June last year, the Japan Iron and Steel Federation said. The figures are not seasonally adjusted.

Eiji Hayashida, chairman of the federation and president of JFE Steel Corp, told a news conference that inventories of cars and other steel-using products have been rising in China since late June, somewhat clouding the outlook for exports.

Japan’s government had forecast last month that Japan steel output would total 26.82 million tonnes in the July-September quarter, up 10 percent from the same period a year earlier but down 4.3 percent from the previous quarter. [ID:nTOE65H020]

Signs of a slowdown in China’s property sector have led to heavy inventory correction in the region and stronger downward pressure on prices since mid-April, raising concerns that Japanese steelmakers will be forced to cut back on their exports.

Japanese steelmakers, including Nippon Steel Corp (5401.T), the world’s fourth biggest, and No.5 JFE Holdings Inc (5411.T) now generate nearly 50 percent of their steel revenues from exports as domestic demand remains sluggish. (Reporting by Yuko Inoue)