ACCOUNT RECONCILIATION AGREEMENT

     THIS ACCOUNT RECONCILIATION AGREEMENT (the "Agreement") is made and entered
into as of the 11th day of March,  2002,  by and between  KEYSTONE  CONSOLIDATED
INDUSTRIES,  INC. d/b/a KEYSTONE  STEEL & WIRE COMPANY,  a Delaware  corporation
("Keystone"), and PSC METALS, INC., an Ohio corporation ("PSC").

                              W I T N E S S E T H:
                               - - - - - - - - - -

     WHEREAS,  pursuant to a Scrap Supply and Consignment  Agreement dated as of
January 31, 2001 (the  "Consignment  Agreement"),  PSC is a critical supplier of
scrap metal and pig iron ("Scrap") from which Keystone regularly purchases Scrap
for use in its business operations;

     WHEREAS,  Keystone is currently  pursuing an out-of-court  restructuring of
its obligations and capital structure (the "Restructuring");

     WHEREAS,  in  connection  with  Keystone's  efforts in  furtherance  of the
Restructuring,  PSC  previously  agreed that  Keystone  could  defer  payment of
certain  past due amounts owed by Keystone to PSC  (collectively,  the "Past Due
Amounts") for past purchases of Scrap until completion of the  Restructuring and
that for current usage,  Keystone would prepay PSC $1,000,000 on each Monday; as
outlined in an October 18, 2001 letter from Frederick J. Smith,  President,  PSC
to Bob Singer, President and CEO, Keystone;

     WHEREAS,  PSC and Keystone hereby expressly  acknowledge and agree that PSC
owes Keystone  $133,000 for mill scale sales and $256,000 related to scrap sales
by Keystone to PSC,  for an aggregate  amount owed to Keystone of $389,000  (the
"Receivable Balance");

     WHEREAS,  PSC and Keystone hereby expressly  acknowledge and agree that the
Past Due  Amounts as reduced by the  Receivable  Balance  result in a net amount
owed by Keystone to PSC of $11,290,822.90 (the "Outstanding Balance"); and

     WHEREAS,  the  parties  desire to  provide  for the  payment in full of the
Outstanding  Balance and other amounts  becoming due between them upon the terms
and subject to the conditions hereinafter set forth.

     NOW,  THEREFORE,  in consideration of the premises and mutual covenants and
agreements herein contained, and for other good and valuable consideration,  the
receipt and  sufficiency of which is hereby  acknowledged by the parties hereto,
it is hereby agreed as follows:

     Section 1. Payment for New Purchases. Consistent with Keystone's continuing
reliance on PSC as a critical  supplier  (see  Section  7(g) of the  Consignment
Agreement),  and,  and for so long as any  portion  of the  Outstanding  Balance
remains unpaid, Keystone will pay to PSC by wire transfer on the morning of each
and every  Monday (or next  business  day  thereafter  in the event a particular
Monday  is not a  business  day)  from and  after  the  date  hereof  an  amount
determined  based  upon the  estimated  Scrap  usage for the then  current  week
(currently  estimated  at  $1,100,000  as of the  date  of  this  Agreement)  as
prepayment  for  purchases of Scrap to be made by Keystone  with respect to such
week.  The  foregoing  prepayment  amount as made  each  Monday  (or  subsequent
business  day) shall be increased or  decreased,  as the case may be, to account
for the difference  between the prepayment  made with respect to the immediately
preceding  week and the actual cost of Scrap  acquired  by Keystone  from PSC in
such week.

     Section 2. Imposition and Application of Surcharge. From and after the date
of the  Agreement  and for so long as any  portion  of the  Outstanding  Balance
remains unpaid,  and in addition to the then current market price charged by PSC
for Scrap, PSC shall charge Keystone and Keystone shall pay PSC a surcharge (the
"Surcharge")  equal to $3.00 per gross ton of Scrap  purchased by Keystone  from
PSC. PSC shall apply all amounts of the Surcharge provided in this Section 2 and
collected by it from Keystone to the payment of the Outstanding  Balance,  which
shall be reduced dollar-for-dollar by the amount of such Surcharge collections.

     Section 3. Payment of the Outstanding Balance. In addition to any Surcharge
or other payment  obligation  imposed upon Keystone  pursuant to this Agreement,
Keystone hereby promises to pay the Outstanding Balance to PSC as follows:

          (a) in the event that the unpaid portion of the Outstanding Balance on
     March  31,  2003  exceeds  80% of the  Outstanding  Balance  as of the date
     hereof,  Keystone shall promptly pay such excess Outstanding Balance amount
     in full;

          (b) in the event that the unpaid portion of the Outstanding Balance on
     March  31,  2004  exceeds  60% of the  Outstanding  Balance  as of the date
     hereof,  Keystone shall promptly pay such excess Outstanding Balance amount
     in full;

          (c) in the event that the unpaid portion of the Outstanding Balance on
     March  31,  2005  exceeds  40% of the  Outstanding  Balance  as of the date
     hereof,  Keystone shall promptly pay such excess Outstanding Balance amount
     in full;

          (d) in the event that the unpaid portion of the Outstanding Balance on
     March  31,  2006  exceeds  20% of the  Outstanding  Balance  as of the date
     hereof,  Keystone shall promptly pay such excess Outstanding Balance amount
     in full; and

          (e) Keystone shall pay in full on March 31, 2007 any unpaid portion of
     the Outstanding Balance as of such date.

     The Outstanding Balance shall not bear interest and may be prepaid in whole
or in part at any time without penalty.

     Section 4. Additional  Required  Payment.  In the event that the EBITDA (as
hereinafter  defined) of Keystone  in any fiscal year shall  exceed  $20,000,000
(any such amount,  the "Excess EBITDA"),  Keystone shall pay to PSC on or before
April 15 of the  following  year an amount  equal to the  product of such Excess
EBITDA  multiplied  by 14.14%,  limited to the extent of the unpaid  Outstanding
Balance as of the date such payment is made.  Notwithstanding the foregoing,  in
the event that any such  payment  pursuant to this  Section 4 would result in an
event of default under any of Keystone's  various  credit  agreements,  Keystone
shall be permitted to defer such payment until such time as payment is permitted
under all applicable  covenants of such credit agreements.  For purposes of this
Section 4,  "EBITDA"  for any fiscal year shall be the amount  determined  based
upon Income  (loss)  before income taxes,  plus  Depreciation  and  Amortization
expense,  plus Interest Expense,  less overfunded defined benefit pension credit
or plus defined benefit pension expense,  as the case may be, all as reported in
Keystone's Annual Report on Form 10-K with respect to such year.

     Section 5. Priority;  No Further  Obligations.  To the extent the terms and
conditions  of this  Agreement  alter or vary the  terms and  conditions  of any
agreement  between the parties  hereto,  the parties hereto agree that the terms
and conditions of this Agreement  shall be deemed to have modified,  amended and
superseded the terms and conditions of such agreement, notwithstanding any terms
or  conditions  therein  to  the  contrary.  Notwithstanding  anything  in  this
Agreement to the contrary, the Consignment Agreement, as amended by the terms of
this  Agreement,  shall  remain in full force and  effect  until  terminated  in
writing by the parties.

     Section 6. Notices.  All notices or other communications which are required
or permitted  hereunder shall be in writing and sufficient if delivered by hand,
by facsimile transmission, by registered or certified mail, postage pre-paid, or
by courier or overnight  carrier to the persons at the addresses set forth below
(or at such other  address as may be  provided  hereunder),  and shall have been
deemed to have been delivered as of the date so delivered:

         If to Keystone:

                  Keystone Consolidated Industries, Inc.
                  Three Lincoln Centre
                  5430 LBJ Freeway
                  Suite 1740
                  Dallas, Texas  75240-2697
                  Attention:  Chief Financial Officer
                  Fax: (972) 448-1408

         If to PSC:

                  PSC Metals, Inc.
                  P.O. Box 931393N
                  Cleveland, Ohio  44193
                  Attention:  Chief Financial Officer
                  Fax: 216-752-9562

     Section 7.  Further  Assurances.  The  parties  hereto  shall  execute  and
deliver,  and file and record,  as the case may be, such  further or  additional
documents,  agreements or instruments as the other party hereto shall reasonably
require to consummate the transactions contemplated herein.

     Section 8. Binding Effect;  Construction.  The covenants  contained  herein
shall  bind,  and the  benefits  hereof  shall  inure  to the  benefit  of,  the
respective heirs, personal representatives,  administrators,  and successors and
permitted assigns, to the extent applicable, of the parties hereto.

     Section  9.  Entire  Agreement;   Severability.   This  Agreement  and  the
Consignment  Agreement  contain the entire  agreement  among the parties  hereto
relating to the matters provided  herein,  and no  representations,  promises or
agreements,  oral or  otherwise,  not  expressly  contained or  incorporated  by
reference  herein  or  therein  shall be  binding  on the  parties  hereto.  The
provisions of this  Agreement are severable and the invalidity of one or more of
the  provisions   herein  shall  not  have  any  effect  upon  the  validity  or
enforceability of any other provision hereof.

     Section 10.  Governing Law. This Agreement shall be governed by,  construed
and enforced in accordance with the laws of the State of Illinois  applicable to
agreements  made  wholly  within  that State and  without  giving  effect to any
principles of conflict of laws.

     Section 11.  Counterparts.  This  Agreement  may be executed in two or more
counterparts, each of which shall be deemed an original and may be delivered via
facsimile or otherwise,  and all of which together shall  constitute one and the
same agreement.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed by the undersigned as of the date first written above.

                             KEYSTONE CONSOLIDATED INDUSTRIES, INC.
                             d/b/a KEYSTONE
                             STEEL & WIRE COMPANY


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                             PSC METALS, INC.


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