German steel output this year is set to fall by more than a quarter to levels not seen since the early 1960s, the German Steel Federation said on Tuesday.

It said in a statement new orders in January and February declined by over 50 percent compared with year-earlier levels and indicators showed the situation was not expected to improve in the second quarter. De-stocking among traders and processors is taking longer than originally expected due to the worldwide economic slump, it added.

Last year's output in Germany -- Europe's biggest economy and the world's seventh-largest steel producer -- stood at 45.8 million tonnes. We expect a decline of more than 25 percent for 2009, Federation President Hans-Juergen Kerkhoff said.

In March the Federation had said production was set to fall below 40 million tonnes for the first time since 1993 but would probably not fall below 35 million tonnes.

Amid shrinking demand from construction and automotive industries, steelmakers such as ThyssenKrupp (TKAG.DE), ArcelorMittal (ISPA.AS) and Salzgitter (SZGG.DE) have already slashed output in the country, where five out of total 15 blast furnaces have been shut down. (Reporting by Marilyn Gerlach; Editing by David Holmes) © Thomson Reuters 2009 All rights reserved