German steel output is set to fall below 40 million tonnes

German 2009 steel output headed for 16-year low. German steel output is set to fall below 40 million tonnes this year for the first time since 1993 when an economic downswing hammered Europe's biggest economy, the German Steel Federation said. Federation President Hans Juergen Kerkhoff told at a steel conference on Wednesday that the second half of this year could see a slight recovery in the market overall. New orders plunged 47 percent in the final quarter of 2008, the biggest drop in the post-war era amidst a brutal downturn in the Germany, the world's seventh-largest steel producer. Both domestic and foreign demand have withered, with overall new orders in October-December declining to 5.7 million tonnes from 10.6 million in the same period of 2007. The steel industry recession stems from a slump in the automotive and engineering industries, continuing liquidity bottlenecks and rising inventories at traders and processors. Steel companies including ThyssenKrupp and market leader ArcelorMittal have already slashed their production due to the collapse in demand. Crude steel production in Germany fell 36 percent in January from a year ago, extending a decline to full-year output of 45.8 million tonnes in 2008 from 48.5 million in 2007. Kerkhoff said February output would also have "the same" trend seen in January. He did not give figures. ThyssenKrupp has said efforts by traders and processors to reduce their inventory levels would eventually lead to demand to replenish stocks in the course of the year. German steel orders on hand as of end-December stood at 7.9 million tonnes, the lowest level in more than a decade. Kerkhoff noted an increasing trend among some non-EU states to tap protestionist measures, saying this is "not acceptable" when the eurozone is still liberal on its steel imports.