HONG KONG, (Yonhap) -- Moody's Investors Service said Wednesday that it has cut its outlook on Hyundai Steel Co. to negative from stable, citing increased challenges surrounding the regional steel industry and the company's more aggressive investment strategy.

   Last December, the global credit appraiser upgraded its rating of South Korea's second-largest steelmaker by two notches to "Baa3" with a "stable" outlook.

   "The negative outlook mainly reflects the increasing likelihood that Hyundai Steel's financial profile will remain weak," said Chris Park, vice president and senior credit officer at Moody's, adding that the company has higher-than-expected financial leverage and faces ongoing challenges surrounding the Asian steel industry.

   He said the revision in outlook also factors in its aggressive capacity expansion plan to accelerate the construction of its third blast furnace project.

   Earlier in April, Hyundai Steel started the construction of its third blast furnace, which will boost its steel output by 4 million tons annually.

   The furnace in Dangjin, 123 kilometers southwest of Seoul, is expected to be completed by September 2013. Hyundai Steel said it will spend 3.25 trillion won (US$3 billion) on the project.

   The steelmaker, swung to loss in the third quarter of the year  from a year earlier mainly due to currency losses. Net loss reached 127 billion won in the July-September period, compared with a profit of 232 billion won a year earlier.