The American goalkeeper is on a season-long loan with F95, though is currently back with City as he recovers from a knee injury.
Kicker says City have informed F95 they intend to keep hold of Steffen for next season, rather than loaning him out.
Steffen is expected to step up to be Ederson's understudy, with Claudio Bravo to leave when his deal expires in June.
Steffen signed for City in January 2019 from Columbus Crew.
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