Crude steel output rose to 104.84 million tonnes in the 2017/18 financial year, against 105.17 million tonnes a year earlier, the federation said.
"Local steel demand for construction and automobiles has been solid, but maintenances and system trouble at some of steel mills earlier in the financial year have contributed to the fall," a researcher at the Federation said.
JFE Steel, Japan's second-biggest steelmaker and part of JFE Holdings Inc, in September trimmed its annual crude steel output by about 300,000 tonnes due to system trouble at its East Japan Works, near Tokyo.
In March, crude steel output rose 2.2 percent from a year earlier to 9.08 million tonnes. Output, which is not seasonally-adjusted, increased 9.5 percent from February.
Output for the January to March quarter came to 26.40 million tonnes, up 0.7 percent from the same period a year ago.
Japan's Ministry of Economy, Trade and Industry (METI) predicted earlier this month that the nation's crude steel output for the April to June period would rise 0.9 percent on increasing local demand for industrial machinery and automobiles.