Strong domestic demand for steel in Japan has prompted Nippon Steel & Sumitomo Metal Corporation (NSSMC) – the world’s second largest steelmaker – to raise its annual net profit forecast.

NSSMC estimates its full-year crude steel production output will be 45.8Mt, a six-year high for the company, but warns that a sales tax increase planned for April will reduce consumer spending and have a negative knock-on effect on demand for cars and housing. The tax is likely to reduce domestic steel demand by 1Mt and exports by 0.5Mt

The Japanese steel giant recently posted Q3 recurring profit of 108.58 billion yen (US$1.06 billion), a huge increase on last year’s figure of 12.51 billion yen (approximately US$123 million).

NSSMC’s Q3 net income rose to 77.2 billion yen and the company forecasts full-year profits to end-March 2014 to be 340 billion yen.

The Japanese steel giant’s figures buck the current Asian trend – that of a prolonged slump due to overcapacity in the Chinese industry. The company attributes its success to stock market and consumer spending recoveries as well as a weaker Yen, which has supported the company’s export business.

There has been greater spending on infrastructure and, claims Nippon, steel demand has been boosted by so-called ‘Abenomics’.

The term ‘Abenomics’ refers to the effect of stimulus policies advocated by Shinzo Abe, the current Prime Minister of Japan.

Positive news for NSSMC is accompanied by the appointment of Kosei Shindo as president, replacing Hiroshi Tomono. Shindo was formerly vice president.

Under Shindo’s command, the company hopes to promote its overseas operations. NSSMC exports around 46% of its production output.