* Japan February crude steel output was 8.93 mln tonnes
* JFE faces higher inventories, may consider output cuts
* Slumping car production is a concern (Adds March crude steel estimate)
TOKYO, April 19 (Reuters) - JFE Steel Corp , the world's fifth-biggest steelmaker, is facing rising inventories due to weak demand from domestic manufacturers following last month's devastating earthquake and tsunami and may need to cut production ahead, the company's president said on Tuesday.
Eiji Hayashida, also chairman of Japan's Iron and Steel Federation, told a news conference for the industry body that the impact of the quake on the output of steelmakers may have been smaller than expected in March, but that shutdowns of car and parts plants may take a heavy toll on steelmakers' production after May.
The magnitude 9.0 earthquake and tsunami on March 11 has forced Toyota Motor Corp and many Japanese carmakers to operate at 50 percent of their target plans as the quake disrupted their parts supply chains and triggered power outages and an ongoing nuclear crisis.
"JFE will decide in early May whether it needs to cut output after seeing carmakers' production levels," Hayashida said.
He said Japan's crude steel output in March may have been reduced by less than 1 million tonnes from February's 8.93 million tonnes, smaller than expected by many industry watchers.
The disaster will end a run of 16 consecutive monthly year-on-year rises in crude steel output, which had become increasingly robust on buoyant exports to Asian consumers.
The earthquake prompted JFE, Nippon Steel Corp and Sumitomo Metal Industries Ltd to temporarily halt their 7 blast furnaces in east Japan, but damage to production facilities was relatively small except for Sumitomo Metal's Kashima plant, which is located closest to the earthquake's epicentre.
Hayashida said demand from domestic manufacturers has been slumping since the quake, and he expects domestic demand for crude steel to decline this financial year despite a pick up in reconstruction demand after the summer.
The steel body will on Wednesday reveal crude steel output data for March and for the 2010/11 financial year ended on March 31.
(Reporting by Yuko Inoue; Editing by Chris Gallagher and Joseph Radford, sourced Reuters)