* German Steel Federation cuts 2008 output forecast * Says sector still doing well from local demand * SGL Carbon CEO pins hopes on emerging markets
FRANKFURT, Nov 7 (Reuters) - German crude steel output is set to fall around 2 percent this year as economic turmoil curbs demand, the country's steelmakers said on Friday, but added domestic producers were in better shape than foreign rivals.
"Compared to other markets, the situation in the German market all in all is still relatively robust," German Steel Federation (VDE) President Hans Juergen Kerkhoff told reporters.
The VDE cut its 2008 crude steel production forecast for Germany -- the world's seventh-biggest steel producer -- by 1 million tonnes to 47.5 million tonnes.
It said demand growth in Germany will slow to 2 percent this year from 5.7 percent as the car industry slashes output.
German carmakers -- which consume about a fourth of domestic steel output -- have scaled back production and warned on profits as financial market turmoil spooks consumers.
But Kerkhoff said production should remain high in coming months in the plant engineering, metal goods, steel building and steel pipes sectors.
New orders in the third quarter were flat year on year but gained 8 percent in the January-September period.
Germany's top steelmaker ThyssenKrupp AG said on Thursday demand for flat steel products had fallen significantly faster than expected in recent weeks. It will stop buying steel slabs from third parties and cut downstream processing shifts.
Also on Thursday Salzgitter AG, the country's second-largest steel producer, said it would cut output in the flat steel and construction sections in December and January by 30 percent.
DOMESTIC FACTORS
Analysts say German steelmakers should do well compared with their European rivals, given demand from the domestic mechanical engineering and wind energy sectors.
And while the construction sector in Germany has weakened in line with the economic downswing, it faces nowhere near the slump that has hit the property market elsewhere in western Europe.
SGL Carbon AG, which makes the electrodes that steelmakers use in furnaces to turn iron and scrap metal into steel, said it was counting on demand from emerging markets to fuel its growth.
With the bulk of global steel produced in emerging markets, North America and Europe have become all but negligible, Chief Executive Robert Koehler told a conference.
"Even if the car industry and the construction industry collapsed (in Europe and North America) ... the effects would not be dramatic as long as the rest of the world remains intact," he told a panel discussion in Frankfurt.
Koehler noted North America and Europe account for about 300 million tonnes of global annual steel output of 1.3 to 1.4 billion tonnes. SGL generates about 90 percent ot sales outside its home market.
Eager to reduce dependence on electrodes, SGL aims to boost sales of carbon fibres and composite carbon materials, which are sought after for their heat resistance, stability and light weight by makers of aircraft, windmills and cars. (Reporting by Marilyn Gerlach and Ludwig Burger; Editing by David Holmes)