Germany's steel industry association said Tuesday it expects European steel demand will pick up into next year, adding that the crude steel output in Germany should rise by just under 2% in 2014.

The industry group known as Wirtschaftsvereinigung Stahl said that it is "cautiously optimistic" the recent upswing in steel demand will lead to a "moderate recovery" of the steel economy next year.

It added that crude steel output in Germany is expected to rise to around 43 million metric tons from the 42.2 million tons it estimates for this year.

Steelmakers across Europe are suffering under the continent's protracted economic weakness that has hit steel demand and prices.

The industry group's president, Hans Juergen Kerkhoff, said that steel demand appears to be bottoming out. He warned, however, that the recovery remains fragile, adding that steelmakers in Germany remain under pressure to bring down costs.