The following is a statement from Moody's Investors Service.

Hong Kong, August 07, 2013 -- Moody's Investors Service has changed its
outlook for Asia's steel industry to negative from stable.

"The negative outlook reflects our expectation that Asian steel
manufacturers will report historically low profits over the next 12
months, as demand for steel is expected to weaken in the second half of
this year, owing to destocking and slower economic growth; particularly
in China," says Jiming Zou, a Moody's Assistant Vice President and
Analyst.

"Manufacturers, distributors and customers will reduce their stocks
because of weak demand and excess steel supply in the Asian market; a
move that will put further pressure on the overall profits of
steelmakers," adds Zou.

Zou was speaking on a just-released Moody's report titled, "Destocking,
Weak Demand and Excess Supply Depress Steel Manufacturers' Profits."

Moody's estimates in its report that demand in Asia will increase only by
around 2%-3% in the 12 months to June 2014, significantly lower than the
16% compound annual growth rate between 2000 and 2010, because of the
Chinese government's shift in emphasis from infrastructure spending to
consumption and the country's slower GDP growth.

As Moody's report points out, data from the World Steel Association (WSA)
shows that China accounts for over 70% of Asia's consumption and
production of steel.

Figures from the China Iron and Steel Association show that total
inventory levels held by China's major steelmakers remain at historically
high levels.

Moreover, according to the WSA, China's monthly steel production
decreased to 64.7 million tonnes in June from its record high of 67
million tonnes in May.

"Even if inefficient Chinese steelmakers lower production levels in the
second half of this year to stem the losses they are facing, the
reductions will not be enough to improve the supply and demand imbalances
for steel," says Zou.

"In addition, the supply-demand situation will worsen if China's GDP
growth falls," adds Zou.

Moody's report explains that besides profitability, the outlook for
Asia's steel industry is also determined by monitoring China's Purchasing
Managers' Index (PMI). Moody's report points out that the PMI fell to
50.3 last month from 50.8 in May. Although the reading in July was up
slightly from June's 50.1, the lowest level in the past nine months,
China's PMI remained weaker than at the beginning of the year. The low
reading indicates very limited expansion in the country's manufacturing
sector.

Moody's report further explains that Asian steelmakers will not benefit
from the lower prices of iron ore and coking coal -- the two main raw
materials used in producing steel -- because steel prices will also fall
owing to the weak bargaining power of the manufacturers against their
customers.

Nonetheless, Japanese steelmakers are better positioned than their Asian
peers to maintain or increase their profitability slightly, because of
the depreciating yen and the improving domestic economy.

By contrast, the profits of Korean steelmakers will fall, due to a
worsening supply-demand imbalance following capacity expansions by major
domestic players, as well as a likely appreciation of the won against the
yen and renminbi, and the weak demand from Korea's shipbuilding sector,
which is one of the key end-users of domestically produced steel.

According to Moody's report, while Chinese steel mills will continue to
sell products at close to or below breakeven cost, making them the least
profitable of all their Asian peers, the profits of Indian steel
manufacturers are helped by their management of input costs through their
ownership of iron ore mines.

Moody's report concludes by saying that the industry outlook could be
changed back to stable if China's PMI improves and stays above 50, and if
the EBITDA per tonne for the region's largest steel makers does not
deteriorate during the outlook period.