DUESSELDORF: Salzgitter, Germany's second-largest steelmaker, has seen a significant demand recovery, its CEO said, adding mergers were not necessarily the best response to the industry's shift towards carbon-neutral production.

"Sentiment has improved considerably," Heinz Joerg Fuhrmann, who will step down at the end of June after 10 years at the helm, told journalists late on Tuesday. "Demand has stabilised significantly."

Salzgitter, which competes with larger peer Thyssenkrupp in Germany, recently raised its outlook for 2021 and expects pre-tax profit of 150 million to 200 million euros ($182-$243 million).

Fuhrmann, who will be succeeded by Vattenfall board member Gunnar Groebler, once again poured cold water on merger speculation, saying he was sceptical whether tie-ups could address the industry's need to cut emissions.

"I don't see it because we have to make the necessary investments, just as our competitors have to at their sites," Fuhrmann said, adding merging with a peer would not reduce the need to invest.

He was more open to cooperation, but said this would only work if it created a win-win situation. One model that has repeatedly being discussed is the creation of a German steel champion involving Thyssenkrupp and Salzgitter.