The new report, entitled "European Steel Industry: Struggles Will Continue into 2013", is now available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release.

"Unfavourable fundamentals in steel's key end markets of construction, automotive and capital goods will lead to a second year of declining steel demand in Europe, which we estimate will be 2%-4% lower than in 2012," says Steven Oman, a Senior Vice President in Moody's Corporate Finance Group and author of the report.

China's soft landing will translate into low prices for steel-making raw materials and an excess of steel and, as a result, higher levels of exports and lower steel prices. Uncertainties surrounding the Chinese economy and the euro area's sovereign debt issues will keep the downside risk associated with Moody's forecast high for the region and the steel industry.

Moody's forecasts that hot-rolled coil prices in northern Europe will average EUR500 per metric tonne and rarely move above EUR530 per tonne over the next year.

As a result, Moody's expects the profitability of many of the rated western European steel companies will be moderately worse in 2013 than in 2012. However, there are considerable differences between the companies and the markets they serve, so their prospects will vary. In fact, there is potential for two of the companies to register improved EBITDA in 2013: Kloeckner & Co. SE (Ba3 stable) and Aperam S.A. (B1 negative).

In contrast, fundamentals for the Russian and the Commonwealth of Independent States (CIS) steel industry are more favourable. Moody's expects domestic demand to be steady in these markets, and the companies it rates generally have low costs, usually owing to their high self-sufficiency in raw materials. Nevertheless, Moody's also expects the profitability of the Russian and CIS companies including NLMK (Baa3 stable) and Magnitogorsk Iron & Steel Works (MMK, Ba3 stable) to decline in 2013, albeit from higher levels.

Moody's could stabilise its sector outlook for the European steel industry if the European PMI rose to 49 and capacity utilisation in the European steel industry moved to a modest 75%.

Subscribers can access this report via this link http://www.moodys.com/research/European-Steel-Industry-Struggles-Will-Continue-into-2013--PBC_147877. NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: London+44-20-7772-5456, New York+1-212-553-0376, Tokyo+813-5408-4110, Hong Kong+852-3758-1350, Sydney+61-2-9270-8141, Mexico City001-888-779-5833, São Paulo 0800-891-2518, or Buenos Aires0800-666-3506. You can also email us at mediarelations@moodys.com or visit our web site at www.moodys.com.

Steven P Oman Senior Vice President Corporate Finance Group Moody'sInvestors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Olivier Beroud MD - Corporate Finance Corporate Finance Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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