Output, which is not seasonally-adjusted, dropped for a sixth consecutive month in August, the federation said.

But output in the world's No.3 steel producer increased 6.6% from July, marking a second straight month-to-month rise.

"Demand remained depressed due to the pandemic, but output picked up from the previous month as some industry activities have resumed since July," a researcher at the federation said.

"Still, we can't call this as a 'recovery' as monthly steel output is far below the pre-pandemic levels," he said.

Japan's top two steelmakers, Nippon Steel Corp and JFE Steel, owned by JFE Holdings Inc, have temporarily shut several blast furnaces in April-July as a result of dwindling demand.

The country's Ministry of Economy, Trade and Industry predicted in early July that Japan's crude steel output was likely to fall 27.9% in July-September to an 11-year low as the pandemic continues to weigh on demand from key buyers such as automakers.

Nippon Steel President Eiji Hashimoto, also the head of the steel federation, has warned Japan's crude steel output may fall below 80 million tonnes this financial year, the lowest since 1968.

By Yuka Obayashi