German steelmaker Salzgitter AG (SZG.XE) Wednesday said it has become a little more optimistic about its further business development in 2009 and reiterated its full-year outlook.

Chief Executive Wolfgang Leese told shareholders at the company's annual general meeting that Germany's second-largest steelmaker behind ThyssenKrupp AG (TKA.XE) anticipates the steel market to normalize at the end of the summer holiday season, with plant utilization rates expected to increase to between 75% and 80%.

Salzgitter's capacity utilization currently stands at 30% to 50% as the company cut production, reflecting a sharp drop in demand for its products due to the recession.

Steelmakers have been suffering under a drastic fall in steel demand as key customers in the automotive, appliance and construction industries cut orders due to the weak sales stemming from the global economic downturn. Large steelmakers around the world have responded to plummeting demand by cutting production, shelving expansion projects and reducing their workforce in order to conserve cash.

Salzgitter CEO Leese also Wednesday said the company still believes reaching around break even in terms of pretax earnings in 2009 is possible provided there's a speedy and strong economic recovery in the second half of the year.

Earlier this month, Salzgitter said a nearly break-even result could mean a loss of EUR30 million to EUR50 million, considering the size of the company. At the time, Chief Financial Officer Heinz Joerg Fuhrmann such a result "isn't the most likely version" because it would require a major turnaround in the market for steel strip and beams, but he added it "isn't impossible".

Leese said that Salzgitter sticks to its plan to delay around EUR200 million worth in investment in 2009 due to the recession.

He also said Salzgitter has around 9,000 workers on short time work in May, of which nearly 5,200 come from the company's steel operations.

In April, around 8,000 of the company's staff were working shorter hours.

Ongoing talks with iron ore suppliers will likely result in price decreases of around 33%, Leese said. The comments came a day after a deal struck between Anglo-Australian miner Rio Tinto PLC (RTP) and Nippon Steel Corp. (5401.TO) that cut iron ore fines prices for the Japanese steelmaker by 33%.

The Rio Tinto-Nippon deal is the first this year and could become the benchmark for the other two big miners, BHP Billiton Ltd. (BHP) and Companhia Vale do Rio Doce (RIO), which are continuing negotiations with steel mills.

Iron ore prices for Salzgitter will most likely decline by a similar amount, said Leese.

Company Web site: www.salzgitter-ag.de

-By Martin Rapp, Dow Jones Newswires; +49 69 29 725 503; martin.rapp@dowjones.com

(Jan Hromadko in Frankfurt contributed to this report.)