By Tom Käckenhoff, Markus Wacket and Christoph Steitz

Germany on Tuesday downplayed hopes for a state bailout of the ailing steel unit of loss-making conglomerate Thyssenkrupp.

The comments by Economy Minister Peter Altmaier came shortly after IG Metall, Germany's most powerful union, called on the government to take a stake in the business, which has been badly hit by the fallout from the coronavirus crisis.

"I do not believe that nationalisation is the right response at the moment," Altmaier said, adding such a step would not solve the sector's problems.

Instead, steelmakers needed to develop future-proof business models, which the government would then be prepared to support financially.

Along with rivals, Thyssenkrupp Steel Europe, Europe's second-largest steelmaker after ArcelorMittal, has been plagued by high raw material costs, weak demand from the car industry and cheap Chinese imports.

The division made a nine-month operating loss of about 700 million euros (636 million pounds).

A company spokesman said Thyssenkrupp was currently working on additional efforts to cut costs at the unit beyond previously announced plans to cut 3,000 jobs by 2026.

"Thyssenkrupp Steel cannot make it on its own," Juergen Kerner, chief treasurer of IG Metall and Thyssenkrupp's deputy supervisory board chairman, had said earlier, adding the union was open-minded with regard to the possible stake size.

Kerner said now was the time for Armin Laschet, state premier of Thyssenkrupp's home state North Rhine-Westphalia, to step forward and take a stance, adding other companies, too, counted federal states as shareholders.

The state of Lower Saxony, for example, is a shareholder in Thyssenkrupp rival Salzgitter as well as Volkswagen.

Asked on the topic earlier at an event in Berlin, Laschet said the focus was more on supporting Thyssenkrupp during its transformation towards hydrogen-based steel production.

"That's why state participations are currently not on the agenda," he said.

(Additional reporting by Andreas Rinke; Editing by Maria Sheahan and Louise Heavens)