Japan's stainless steel shipments to the United States for the January to April period amounted to 56,800 tonnes, up by 54.6 percent from the same period a year earlier, the Japan Stainless Steel Association said on Thursday.

"Since Japan's main export market, Southeast Asia, is in dismal condition, shipments to the United States have increased and the strong trend will continue until August," a senior metal trader at a leading trading house said.

Japan needs to maintain exports at about 30 per cent of its total stainless steel production to keep the domestic market in balance. Asia has accounted for about 80 percent of exports in recent years. Japan is by far the world's largest stainless steel producer with output of 3.26 million tonnes last year.

Demand ofstainless steel accounts for two-thirds of world nickel consumption.

Nickel prices on the London Metal Exchange (LME) fell to fresh 4- year lows of $4,225 a tonne on Wednesday, reflecting a further deterioration of demand.

Earlier this week, US Nickel premiums hit a low for the year due to massive stainless steel imports from Asia."Not only Japanese stainless steel makers, but also other Asian suppliers such as South Korea and Taiwan, along with European makers, are trying to gain market share in the United States as stainless steel prices are higher there than in Europe and Asia," the trader said.

Traders said the yen's weakness against the dollar also helped boost Japan's exports to the United States.South Korea's stainless cold-rolled sheet exports surged 78.3 per cent year on year in the first five months of this year, an industry newspaper in South Korea said on Wednesday.

However, Japanese stainless steel exports to the United States are likely to fall after August since the United States isconsidering imposing anti-dumping duties on stainless steel sheet imports from Japan, Taiwan and some European countries.The move would add further pressure to the glut of stainless steel supplies in Japan, with domestic demand already hit by the ailing economy, the traders said. Reflecting the slow domestic market conditions, Japan's demand for nickel for this year is likely to fall from about 189,000 tonnes last year, traders said.

"We expected at least a 10 per cent fall in nickel demand," a nickel trader at a leading trade house said. "There has been hardly any offers for nickel," he added. The traders said the outlook for Japanese stainless steel makers was grim due to sluggish market conditions both in prices and demand.

The stainless steel makers have joined hands to cut stain less steel output by up to 20 percent since April from the same periods last year in an effort to prop up domestic prices.

"We have never experienced such a slump in stainless steel demand although we are reducing output.Inventories are swelling," said a spokesman for Nippon Metal Industry Co Ltd.

Steel maker NKK Corp said it would withdraw from the stainless steel sheet business since profitability had deteriorated sharply amid a decline in demand from other Asian countries.