UPDATE 1-Nippon Steel closely watching auto output plans

* To look at revising output plan depending on carmakers' plans * No change in Nippon Steel's global expansion strategy (Adds details, background)

TOKYO, Feb 2 - Nippon Steel Corp, the world's No. 2 steelmaker, will look at revising its production outlook after seeing Toyota Motor Corp and Honda Motor Co's first-quarter output plans due later this month, a company executive said.

Kiichiroh Masuda, Nippon Steel executive vice president, also said the company would continue its strategy of expanding globally despite the current economic downturn, as demand is expected to recover somewhat in a few years.

Nippon Steel has slashed its annual outlook by 36 percent and forecast a loss for the current quarter as the spreading global recession clobbers auto sales at key customers like Toyota and Honda, while demand has slowed in all sectors.

"We are closely watching Toyota and Honda's April-June production plans and we will review our plans then," Masuda told Reuters in an interview on Monday.

"In case Toyota cuts its April output plans, we will further reduce our production after April, though we think the chance is small," Masuda said.

Nippon Steel has said its output will plunge by about 40 percent in January-March from a year earlier to a record low 5 million tonnes.

It plans to idle two blast furnaces for several months to cope with the production cut, but expects to restart them later this year, betting automakers will see inventories return to appropriate levels by June and start increasing output to match real demand by around July at the latest.

Toyota, Nippon Steel's top customer, said last month it would cut production at several North American plants over the next several months in a bid to halve its inventory of vehicles.

The Asahi newspaper reported that Toyota is planning to halve its domestic production in February-April from a earlier in response to slumping global sales.

Masuda said a pick-up in steel prices and a strengthening of demand for construction machinery in China are bright signs, but they should be carefully watched for another month for whether they indicate a real recovery.

He also said Nippon Steel would continue its strategy of expanding in the global market, with a view that demand will recover to a certain level after three years.

The company's global expansion plans call for building two integrated steel mills -- one in Brazil and another in Asia -- strengthening processing capacities in big markets and securing its own iron ore or coal mines, among other steps, he said.

Despite such plans, the company aims to stick to its current debt-to-equity ratio of 0.7, Masuda said.