The US government yesterday welcomed a sharp drop in Japanese steel imports into the United States in December but maintained the threat of trade sanctions.

"One month does not make a trend but we are nonetheless encouraged by these data," said Commerce Secretary Mr William Daley following the early release of preliminary figures showing a plunge of some 48.8 per cent in steel imports from Japan for the month. The latest US import figures had been keenly awaited as a key sign of how the US-Japan trade dispute over steel might unfold.