UNITED STATES SECURITIES AND EXCHANGE COMMISSION
            Washington, D. C.  20549
                    FORM 10-K


 X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
For the fiscal year ended     December 31, 1997
                       OR

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
For the transition period from                    to
Commission file number    0-3855

             Laclede Steel Company
(Exact name of Registrant as specified in its charter)

              Delaware                       43-0368310
(State or other jurisdiction of              (I.R.S. Employer
 incorporation or organization)              Identification No.)

     One Metropolitan Square
     211 North Broadway
     St. Louis, Missouri                          63102
(Address of principal executive offices)         (Zip Code)

Registrant's telephone number, including area code  (314) 425-1400
Securities registered pursuant to Section 12(b) of the Act:

                                     Name of
each exchange on
        Title of each class                    which registered
               None                                  None

Securities registered pursuant to Section 12(g) of the Act:

                       $.01 par value, Common Stock
                (Title of class)

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.  Yes   X    No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in any amendment to this Form 10-K.  [X]

     At the date of filing of this report there were 4,056,140 shares of $.01
par value common stock outstanding.  At February 20, 1998 the aggregate market
value of voting stock held by non-affiliates of the Registrant was
approximately $7,299,000.

      Documents Incorporated by Reference

                      NONE


                     PART I

     Item 1.   Business.

     (a)  General Development of Business

     Laclede Steel Company is a manufacturer of a wide range of carbon and
alloy steel products, including pipe and tubular products, hot rolled products
(primarily special quality bars), wire products, and welded chain.  The Company
converts its semi-finished steel into products through its rolling mills and
finishing plants.  The Company produces wire products and welded chain
utilizing rods purchased on the open market.  Each of the Company's finishing
facilities is located near its end markets and is specialized by product to
optimize efficiency.

     The Company is one of three full-line domestic producers of continuous
weld pipe in the United States.  In addition, the Company believes it is an
important North American producer of oil tempered wire, which is used for
applications such as mechanical springs and overhead garage door springs.  Oil
tempered wire has metallurgical properties that typically command a price
premium over commodity grades of wire, and therefore produces higher profit
margins.  The Company's manufactured and imported chain products give it a
significant position in the truck and automobile tire chain and the hardware
and industrial chain markets.  The Company's special quality bars are primarily
sold to forgers for finishing into a variety of products.

     The Company produces semi-finished steel at its Alton, Illinois Plant.
With the completion of a Ladle Furnace facility in the second quarter of 1996
the Company now produces all of its steel by the more efficient continuous cast
method.  Annual steelmaking capacity is estimated at 780,000 net tons.  Through
1995, the Alton Plant had supplied nearly all of the semi-finished steel used
to finish products at the Company's downstream facilities.  The Company began
purchasing rods for its two wire mills and the welded chain operations in the
second quarter of 1996.  Over the last twelve years the Company has acquired or
leased five additional finishing facilities, constructed a new finishing
facility and relocated much of its labor-intensive work to lower cost labor
areas.  On February 10, 1997 the Company sold the assets of its electric weld
structural tubing operation located in Benwood, West Virginia.  Sales of
structural tubing accounted for approximately 6% of consolidated net sales in
1996.

     At December 31, 1996 Ivaco Inc. of Montreal, Canada owned 2,018,650
shares of the Company's common stock or 49.8% of the total number of shares
outstanding.  On September 26, 1997, a subsidiary of Ivaco Inc. sold one-half
of the Ivaco investment in the Company to Midwest Holdings, Inc., a
wholly-owned subsidiary of Birmingham Steel Corporation ("Midwest Holdings").
The securities of the Company sold consisted of 1,009,325 common shares and
183,334 shares of the Company's Series A preferred stock.  The preferred shares
are convertible into 859,834 common


                      - 2 -

shares of the Company.  The transaction was effected through the sale of a
wholly-owned subsidiary of Ivaco which contained such shares to Midwest
Holdings.  In connection with the transaction Ivaco, among other things, gave
Midwest Holdings the voting rights on Ivaco's remaining investment in the
Company's common stock and, in any additional common stock Ivaco may own as a
result of the conversion of Ivaco's remaining Series A preferred stock, subject
to certain limitations.  In addition, Ivaco agreed not to sell any portion of
its remaining investment in the Company prior to September 24, 1998 and has
provided Midwest Holdings with a limited right of first refusal with respect to
such interests until September 24, 2002.  At December 31, 1997 Birmingham Steel
Corporation and affiliates owned 1,029,325 shares of the Company's common stock
or 25.4% of the total number of shares outstanding and Ivaco Inc. owned
1,009,325 shares or 24.9% of the outstanding shares.

     (b)  Financial Information
     The following table sets forth certain financial information relating
to Registrant's operations:

                                   Year Ended December 31,
(Thousands of Dollars)        1997          1996          1995

Net Sales                   $325,029      $335,381      $320,350

Net Loss                    $ (3,007)     $ (9,985)     $(10,137)

Identifiable Assets         $313,820      $331,110      $349,778


     (c)  Description of Business
     The following table lists the Company's wide range of steel products:

Pipe and Tubular Products:    Continuous Weld Pipe
                              - A53 Standard and Extra Heavy
                              - API 5L Line Pipe
                              - Coupling Stock
                              - Fence Pipe
                              - Rigid Conduit Shells

Hot Rolled Products:          Carbon and Alloy SBQ Bars
                              Forging Billets
                              Special Shapes
                              Special Processing

Wire Products:                Cold Drawn Wire
                              - High Carbon
                              - Low Carbon

                              Heat Treated Wire
                              - Carbon Oil Tempered
                              - Alloy Oil Tempered
                              - Annealed

Chain:                        Welded Chain

                      - 3 -


     The following table presents, for the years indicated, the percentage
of the Company's total sales by product class:

     Product             1997      1996      1995

     Pipe and tube       38.0%     41.1%     40.8%

     Hot Rolled          37.8      35.1      34.7

     Wire                14.8      13.6      16.4

     Chain                9.4      10.2       8.1

     Total               100%      100%      100%

     Pipe and Tubular Products.  The Company's tubular products consist
primarily of continuous butt weld ("CBW") pipe which is sold in the U.S. and
Canada to distributors and manufacturers.  Pipe products are produced and
finished at the Company's Alton and Fairless Hills, Pennsylvania Plants and
finished at the Vandalia, Illinois Facility.  Prior to 1993, the majority of
the Company's CBW pipe was finished at the Alton Plant or at the Fairless
Facility, as discussed below.  While semi-finished pipe continues to be
produced at the Alton Plant, in 1993 the Company moved the majority of the
Alton Plant's finishing operations to the Company's new Vandalia Facility.  By
the end of 1993, the majority of CBW pipe was no longer finished at the Alton
Plant.  In February 1997 the Company sold the assets of its electric resistance
weld tubing operation located in Benwood, West Virginia.  This product
accounted for approximately 6% of consolidated net sales in 1996.

     The Company is one of only three full line producers of CBW pipe in
the United States, due in part to the Company's long-term lease from former
competitor USX Corporation of its pipe manufacturing facilities at the Fairless
Facility.

     In 1996 the Company completed the planned modifications to the Melt
Shop at the Alton Plant by installation of a Ladle Furnace Facility that
allowed the Company to shift the remaining portion of its steel production used
in pipe making from the ingot process to the more efficient continuous cast
method.

     Hot Rolled Products.  The Company's hot rolled products are produced at
the Alton Plant and consist primarily of special quality ("SBQ") bars sold to
manufacturers to be cold drawn or forged.

     Wire Products.  The Company is a major manufacturer of wire products.
These products include high and low carbon wire, oil tempered wire, and
annealed wire.  The Company believes it is an important participant in the oil
tempered wire market.  Wire



                      - 4 -



products are currently manufactured and finished at the Company's
Memphis, Tennessee and Fremont, Indiana Facilities.  The Fremont Facility is
the Company's stand-alone oil tempered wire plant which the Company believes to
be a state-of-the-art facility.  The Fremont Plant has begun producing oil
tempered wire for automobile suspension springs and for brake springs.  This is
a recently developed new product which is expected to have a positive effect on
profitability.

     Chain Products.  Laclede Chain, one of the Company's wholly owned
subsidiaries, produces welded chain and also imports a significant amount of
chain for resale.  Laclede Chain generated in excess of $30 million in sales in
1997, approximately 47% of which was attributable to sales of anti-skid devices
for trucks and automobiles.  The balance of the Company's chain products sales
is in the hardware and industrial chain business.

     At December 31, 1997 and 1996 the Company had a sales backlog of over
$30 million.  This backlog does not have significant seasonal variation.
Long-term sales commitments do not represent a significant portion of the
business.

     Research and development activities of the Company have not been
material.

     The Company manufactures steel from steel scrap generated in the
course of its steel production and purchased in the open market from numerous
scrap suppliers.  Since it does not produce its own raw materials, the Company
is subject to the fluctuation in prices and availability of scrap.  See
Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) for additional discussion.

     The Company's business strategy has been to modernize its basic
steelmaking facilities at the Alton Plant while growing and modernizing its
lower cost, downstream finishing facilities.  In the months ahead management
will be reviewing all of the operations to develop a plan to improve the
long-term profit- ability of the Company and maximize our cash flow.  The
Company will also be exploring alternatives to strengthen the balance sheet of
the Company.

     The Company began its business expansion with the acquisition of a
chain manufacturer in northwestern Missouri in 1984.  Since 1984 the Company
has acquired four additional facilities and constructed one new facility.  Most
notable among these new and/or expanded facilities are the Company's lease of
the pipe manufacturing facilities at the Fairless Facility, the Company's
expanded oil tempered wire operations at the Fremont Facility, and the
construction of the Vandalia Facility, a tubular finishing plant.

     The Fremont Facility was expanded in order to handle the majority of
oil tempered wire volume previously produced at the Alton Plant's wire mill.
Relatively minor amounts of oil

                      - 5 -



tempered wire are produced at the Memphis Plant.  The Vandalia Facility
processes semi-finished pipe produced at the Alton Plant.

     In 1996 the Company completed a planned restructuring of the
steelmaking facilities at the Alton Plant.  The Company's Ladle Furnace
Facility became operational in the second quarter of 1996 and all steel is now
produced using the more efficient continuous cast method.  In connection with
this restructuring, the Company shut down its Blooming Mill and Rod Mill
operations.  The shutdown of these facilities, together with the move to 100%
continuous cast steel, have resulted in more efficient operations at the Alton
Plant. In 1996 the Company began purchasing the rod requirements for its wire
operations on the open market resulting in reduced costs and improved quality.

     In February 1997, the Company sold the assets of its electric weld
structural and mechanical tubing operation, located in Benwood, West Virginia.
After collection of a related note receivable, cash proceeds from the sale of
these assets, which consist primarily of equipment and inventory, totaled
approximately $11.0 million.  The Company used the funds from the sale to
improve its working capital position.  Sale of these assets did not affect the
Company's primary tubular business, continuous weld pipe.

     Capital Improvements.  While the Company has expanded and improved its
downstream finishing facilities, it has also completed important capital
improvements to the steelmaking operations at the Alton Plant.  The primary
objective of these improvements was to substantially reduce production costs
and provide access to new markets.  For further information and for discussion
of future capital expenditure plans, please refer to MD&A.

     Competition

     The Company believes that the principal competitive factors affecting
its business are price, quality and customer service.  Price sensitivity in
markets for the Company's products is driven by competitive factors and the
cost of steel production.

     Domestic.  The Company faces competition from regional mini-mill
companies and fully integrated steel mills, and such competition can be
expected to continue.  Moreover, the addition
of new sheet capacity in the industry has had and will continue to have a
favorable impact on production costs of the Company's tubular product
competitors.  The Company also expects increased competition in its bar product
business as announced increases in capacity materialize.

     Foreign.  The Company also faces competition from foreign steel
producers.  Foreign competition may increase in the future, due to factors such
as changes in currency exchange rates, repeal

                      - 6 -



of duties on foreign-produced steel or the enactment of restrictive or
burdensome regulations or taxes that affect domestic but not foreign steel
manufacturers.  Many foreign steel producers are owned, controlled or
subsidized by their governments and their decisions with respect to production
and sales may be influenced more by political and economic policy
considerations than by prevailing market conditions.

     Environmental Matters

     In general, the Company is subject to a broad range of federal, state
and local environmental regulations, including those governing discharges into
the air and water, the handling and disposal of solid and/or hazardous wastes
and the remediation of contamination associated with the release of hazardous
substances.  The domestic steel industry, including the Company, has spent
substantial amounts to comply with these requirements.  Although the Company
believes it is in substantial compliance with the various environmental
regulations applicable to its business, there can be no assurance that future
changes in environmental regulations will not require the Company to incur
significant costs in order to comply with such future regulations.

     Specifically, like all electric arc furnace (EAF) steel producers, the
Company generates EAF dust as part of the steelmaking process.  For some time,
the EPA has classified EAF dust as a designated hazardous waste.  Over a period
of years, the Company accumulated approximately 145,000 tons of this material
on-site at the Alton Plant, pending development of technology for economical
treatment.  The Company has received approval of a modified closure plan for
disposition of this existing EAF dust with the Illinois EPA which provides for
the closure of all piles in place.

     In December 1997, the Company idled its High Temperature Metal
Recovery facility ("HTMR") after the facility became inoperable due to an
accident.  This facility was used to dispose of the Company's EAF dust generated
in the Alton Facility.  During 1998, management plans to dispose of the EAF dust
through alternative methods.  Management plans to evaluate the HTMR facility
periodically to determine the economic feasibility of repairing and operating
the unit.

     Employees.  As of December 31, 1997, the Company employed approximately
1,475 employees, 300 of whom are classified as management, administrative and
sales personnel.

     The Company's 685 hourly employees at the Alton Plant are covered by a
collective bargaining agreement that expires in September of 2001.  None of the
Company's other employees are covered by a collective bargaining agreement.
The Company has never experienced a strike, and it believes that its relations


                      - 7 -

with its employees are good.  The compensation for the majority of the
Company's employees is based partially on productivity in accordance with
various incentive plans.

     Item 2.   Properties.

     The Company's steelmaking facilities are located on a 400-acre site in
Alton, Illinois, and consist of two electric furnaces with a combined rated
production capacity of over 780,000 net tons per year, a ladle metallurgy
facility, a continuous bloom casting facility, a roughing mill and 14-inch bar
mill, 8-inch bar mill, 22-inch strip mill and facilities for the manufacture of
continuous butt-weld pipe.  The Company also has a pipe finishing plant in
Vandalia, Illinois, a chain manufacturing plant in Maryville, Missouri, a wire
mill in Memphis, Tennessee and a wire oil tempering facility in Fremont,
Indiana.  The Company operates a pipe mill in Bucks County, Pennsylvania which
is leased from USX Corporation.  The lease expires September 30, 2001 with an
option to renew until September 30, 2006.

     The Company's property is well maintained and adequate for production
of its existing product line.  The majority of the Company's properties are
owned in fee.  For its executive offices the Company presently leases space in
the Metropolitan Square Building in downtown St. Louis under a lease expiring
on April 30, 2004.

     Item 3.   Legal Proceedings.

     There are various claims pending involving the Company and its
subsidiaries with respect to environmental, hazardous substance, product
liability, personal injury, and other matters arising out of the routine
conduct of it business.  The Company believes it has meritorious defenses with
respect to all claims and litigation and the ultimate disposition of such
matters will not materially affect its financial position or results of
operations.

     Item 4.   Submission of Matters to a Vote of Security Holders.

     At the annual meeting of the stockholders held on December 16, 1997
the following directors were elected:

          Name                       Number of Votes

     Joseph Alvarado                    3,722,425
     Robert A. Garvey                   3,722,875
     Michael H. Lane                    3,719,818
     William R. Lucas, Jr.              3,722,425
     Wayne P. E. Mang                   3,722,425
     John B. McKinney                   3,719,368
     Philip R. Morgan                   3,723,675
     Robert H. Quenon                   3,722,211
     George H. Walker III               3,721,361

                      - 8 -



                     PART II

     Item 5.   Market for the Registrant's Common Equity and Related
               Stockholder Matters.

     Laclede's common stock is traded on the NASDAQ National Market System
and the symbol is LCLD.  As  of January 1998 there were approximately 550
stockholders of record.

     Market
     Price Range              1997                   1996
     Quarter            High        Low         High        Low

       First          $ 5         $ 3-1/8     $ 8        $ 5-1/2
       Second           4-5/8       3-5/8       8-1/4      5-3/8
       Third            5-3/16      3-1/2       6-3/8      4
       Fourth           6           3-7/8       4-1/2      2-3/4


     Dividends Per
     Share Paid on
     Common Stock            1997                  1996
                              None                  None

     Payment of dividends on common stock is limited by the Company's Loan
and Security Agreement.  See Note 4 to the Company's Consolidated Financial
Statements.  In addition, the Certificate of Designation for the Company's
outstanding Series A Preferred Stock provides that the Company shall not
declare or pay any dividends on the Company's common stock unless full
cumulative dividends have been paid or declared on the Series A Preferred
Stock.  At this date, full cumulative dividends have not been paid or declared
on the Series A Preferred Stock.

     On July 30, 1996, the Company sold 416,667 shares of Series A Preferred
Stock to Ivaco Inc. and the executive officers of the Company for an aggregate
sales price of approximately $6,250,000.  There were no underwriters and no
underwriting discount or commission and the net proceeds to the Company, after
expenses, was $6,090,000.  The sale of the Series A Preferred Stock to Ivaco
Inc. and the executive officers of the Company was exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) as a transaction not
involving any public offering because of the limited number of offerees, each
of whom was a sophisticated investor and fully informed as to the risks
involved.  On October 28, 1996, at a special meeting of stockholders, the
Company's stockholders approved a recapitalization of the Series A Preferred
Stock such that each share of the preferred stock became convertible into the
Company's Common Stock at the option of the holder at a conversion price of
$3.20 into 4.69 shares of common stock.




                      - 9 -
     Item 6.   Selected Financial Data.

<TABLE>
<CAPTION>
                       Five-Year Financial Summary

                           (In Thousands of Dollars Except Per Share Data)

                                    1997        1996        1995        1994       1993
<S>                               <C>         <C>         <C>         <C>        <C>
Net Sales                         $325,029    $335,381    $320,350    $341,289   $328,766
Earnings (Loss) Before Cumulative
 Effect of Change in Accounting
 Principle*                       $ (3,007)   $ (9,985)   $(10,137)   $  4,462   $  3,107
Net Earnings (Loss)*              $ (3,007)   $ (9,985)   $(10,137)   $  4,462   $(43,436)
Basic and Diluted Net
 Earnings (Loss) per share*       $  (0.83)   $  (2.50)   $  (2.50)   $   1.10   $ (10.71)
Other Financial Data
  Total assets                    $313,820    $331,110    $349,778    $343,251   $349,814
  Working capital                   55,899      62,001      87,759      88,906     88,833
  Capital expenditures               3,016      10,726      13,847      14,747     12,782
  Long-term debt                   109,157     107,889     118,791     100,801    100,926
  Stockholders' equity              21,101      17,245      16,518      53,743     42,590
  Stockholders' equity per share  $   5.20    $   4.25    $   4.07    $  13.25   $  10.50
  Cash dividends per share        $     --    $     --    $     --    $     --   $     --

</TABLE>

*    Includes restructuring, asset impairment and other charges which reduced
net earnings in 1996 by $1.0 million or $.24 per share and in 1995 by $11.4
million or $2.81 per share.


     Item 7.   Management's Discussion and Analysis of Financial Condition and
               Results of Operations.

Operating Results 1995 to 1997

     The net loss for 1997 was $3.0 million.  In the first quarter of 1997
the Company realized an after-tax gain of $.6 million on the sale of its
Benwood Facility.

     The net loss for 1996 was $10.0 million which included a $1.6 million
($1.0 million after tax) charge for an early retirement incentive in the fourth
quarter discussed in Notes 5 and 6 to the Consolidated Financial Statements.

     Net earnings for 1995 were $1.3 million before the effect of
restructuring, asset impairment and other charges described in Note 6 to the
Consolidated Financial Statements.  The net loss for 1995 was $10.1 million
after deducting the $11.4 million after-tax effect of the special charges.








                      - 10-



     The change in net sales for the last three fiscal years is analyzed as
follows:
                                  (In Thousands)
                 1997 Vs. 1996  1996 Vs. 1995  1995 Vs.1994

Increase (Decrease)
 in net sales            $(10,352)      $ 15,031       $(20,939)
Comprised of:
  Increase (Decrease)
    in volume            $(13,107)      $ 32,192       $(24,788)
  Increase (Decrease)
    in price             $  2,755       $(17,161)      $  3,849

     In 1997 net sales decreased by $10.4 million compared to 1996
reflecting a 3.4% decrease in steel shipments and an overall increase in sales
prices.  Lower shipments are primarily a result of the sale of the Benwood
electric weld structural tubing operation.  The overall increase in sales
prices reflects an improved product mix in shipments of continuous weld pipe
and higher prices for oil tempered wire.  SBQ bar prices, which began to
decline in 1995, remained at lower levels throughout 1997.

     Cost of products sold decreased by $17.4 million in 1997 versus 1996
reflecting the 3.4% decline in shipments, the effect of cost reductions
implemented in late 1996, and lower costs for the Company's basic raw material,
ferrous scrap.  The Company also continued to benefit from the productivity
gains which it began to experience in most of its operations in the second half
of 1996.

     The Company's 1997 fourth quarter results, however, were affected by
negotiations with the Steelworkers' Union for a new contract at the Alton
Plant.
During the first half of October hourly employees at the Alton Plant worked
without a contract while the Company continued negotiations with the Union.
During the period significant non-recurring expenses were incurred in
preparation for a potential strike.  While the Company and the Union were able
to reach an agreement without a work stoppage, the uncertain situation
contributed to poor productivity in October.  In the fourth quarter of 1997 the
Company also recorded inventory write-downs of $3.4 million, primarily related
to tubular products and semi-finished steel.  This adjustment, which reduces
the carrying cost to estimated net realizable value, was based on a review of
year-end inventory.

     Net sales increased by $15.0 million in 1996 over 1995 resulting from a
13.5% increase in tons shipped offset by a 5.4% reduction in selling prices.

     Cost of products sold increased by $30.3 million reflecting the higher
volume of shipments in 1996 and a change in the mix of products sold.



                     - 11 -



     In 1995 net sales decreased by $20.9 million as a result of a 6.4%
reduction in steel shipments.  While sales prices declined in the second half
of 1995, average prices for the year were slightly higher than 1994.

     Cost of products sold decreased by 6.4% compared to 1994, reflecting
lower volume.  As discussed below, production costs in 1995 include the effects
of further increases in the cost of the Company's basic raw material, ferrous
scrap.

     In 1995 scrap prices were 3.4% higher than 1994.  In 1996 and 1997
scrap prices declined, with average scrap prices in 1997 about 4% lower than
1995.

     In addition to demand for steel, there are other factors affecting the
supply of scrap that could be considered structural changes, including the
growth in electric furnace production which is almost totally dependent on
ferrous scrap as a raw material.

     In the first half of 1995, the Company was able to recover the
increased scrap costs through higher selling prices for its products.  In the
second half of 1995 and in 1996, declining sales prices had a negative impact
on product margins.

     In December 1995 a decision was made leading to a restructuring of the
steelmaking facilities at the Alton Plant.  As a result of this decision,
accounting charges totaling $9.8 million after taxes were recorded in the
fourth quarter of 1995.  These charges, which are primarily non-cash in nature,
include recognition of impairment loss for equipment, retirement costs for
affected employees, and adjustments of rod and wire inventories to market
value.

     The Company also recognized a charge of $1.6 million, after taxes,
related to inventory write-downs in its tubular product operations.  This
inventory adjustment, which reduced the carrying cost to net realizable value,
reflected higher production costs together with significant reductions in
selling prices for tubular products.  Pressure on sales prices in 1995 was
caused by lower prices for sheet steel, the raw material for the Company's
competitors in the pipe market.

     The Company's Ladle Furnace Facility became operational in the second
quarter of 1996 and all steel is now produced using the more efficient
continuous cast method.  The Company ceased production of rods, and began
purchasing requirements for its wire operations on the open market, at a
significant reduction in costs.

     In connection with this restructuring, in 1996 the Company also shut
down its Blooming Mill and Rod Mill operations.  The shutdown of these
facilities, together with the move to 100% continuous cast steel, results in
more efficient operations at


                     - 12 -



the Alton Plant.  These actions, however, resulted in production inefficiencies
and higher costs early in the year.  These inefficiencies continued after the
start-up of the Ladle Furnace until August 1996 when the Company began to
experience progress in the form of lower steelmaking costs.

     Selling, general and administrative expenses were lower in 1997
primarily as a result of reductions in the salaried workforce.

     The 1997 decrease in interest expense is due to a decrease in average
borrowings outstanding.  The increase in interest expense in 1996 over 1995
reflects an increase in the average borrowings outstanding and a slightly
higher average rate of interest.

     In the second quarter of 1995 the Company completed the sale of
approximately 3% of the common stock of its subsidiary, Laclede Mid America,
Inc.  Accordingly a non-taxable gain of $728,000 representing the excess of the
sales price over the net book value of the stock sold, is included in the
results for 1995.  Higher depreciation expense in 1995 is a result of increased
capital expenditure levels.  Reduced depreciation in 1996 reflects the shutdown
of the Blooming Mill and Rod Mill at the Alton Plant.

     General inflation has not had a significant effect on the Company's
sales and revenues, which are more related to factors such as domestic steel
capacity, currency levels, demand for the Company's products, and the impact of
foreign steel imports.  Imported steel typically has the greatest impact on the
Company's tubular products.

Divisions and Subsidiaries

     The Company operates a cold drawn wire mill in Memphis, Tennessee and
an oil tempered wire facility in Fremont, Indiana.  In 1998 the Fremont Plant
expects to increase its production of certain higher grades of oil tempered
wire, utilizing technology developed in connection with the project to produce
wire for suspension springs.

     The Company's wholly-owned subsidiary, Laclede Chain Manufacturing
Company, operates a manufacturing plant in Maryville, Missouri and a warehouse
and sales operation in Portland, Oregon.  The Laclede Chain operation made a
significant contribution to consolidated earnings in the fourth quarter of
1996.
Fourth quarter 1997 results for Laclede Chain were substantially below
expectations.  This is a direct result of unusually mild weather in the
Northwest in November and December, and its impact on traction chain sales.





                     - 13 -



     Under an agreement with USX Corporation the Company leases the Pipe
Mill Operations located at the Fairless Works in Bucks County, Pennsylvania.
Shipments of continuous weld pipe from the Fairless Plant represented 36% of
tubular products sales in 1997.

     The Company also operates a tubular finishing plant in Vandalia,
Illinois.  The Vandalia facility processes semi-finished pipe produced at the
Alton Pipe Mill.  Shipments of continuous weld pipe from the Vandalia Plant
represented 44% of tubular products sales in 1997.

Liquidity and Capital Resources

     In the year 1997 operating activities used $8.5 million in cash.  This
compares to 1996 when $11.8 million was provided, reflecting a large decrease
in inventories and an increase in accounts payable.  Contributions to Company
pension plans totaled $14.7 million in 1997, $15.0 million in 1996 and $11.3
million in 1995.  In 1995 operating activities used $4.9 million in cash.
Significant expenditures also included capital expenditures of $3.0 million in
1997, $10.7 million in 1996 and $13.8 million in 1995.
     In February 1997 the Company completed the sale of its electric weld
structural and mechanical tubing operation, located in Benwood, West Virginia.
After collection of a related note receivable, cash proceeds from the sale of
these assets, which consisted primarily of equipment and inventory, were
approximately $11.0 million.  Net working capital decreased by $6.1 million
during the year and the ratio of current assets to current liabilities was 1.8
to 1.0 at December 31, 1997.

     In the third quarter of 1997 the Company reached an agreement with its
lenders for an increase in availability under the Loan and Security Agreement
of approximately $13.0 million, the majority of which was applied as a
reduction in trade accounts payable.

     The Company has periodically amended its Loan and Security Agreement to
modify financial covenants relating to operating results and net worth.  The
most recent amendment was effective March 27, 1998.  In the event further
amendment to financial covenants is necessary in the future, there can be no
assurance that the Company will be able to obtain such amendment.

     The Company is also required to comply with various covenants related
to limits on liability as defined in the Pollution Control Revenue Bonds.  At
December 31, 1997, the Company was in compliance with these covenants.  As part
of the modifications to the Restated Loan and Security Agreement previously
mentioned, in 1997 the Company received the approval of parties to the Solid
Waste Revenue Bonds to eliminate certain negative financial covenants contained
therein and to substitute therefore certain collateral.  Subsequent to that
substitution, the only remaining negative financial covenant with respect to



                     - 14 -



the Solid Waste Revenue Bonds is that the Company may not without
the prior written consent of the Issuer of the Bonds (i) borrow from its
subsidiary, Laclede Chain Manufacturing Company, or (ii) take cash advances
from Laclede Chain Manufacturing Company, except to the extent that the
aggregate principal amount of all such borrowings and cash advances at any one
time do not exceed $7.0 million.  Collateral granted to the Trustee of the Solid
Waste Revenue Bonds for the benefit of the bondholders consists of (i) all of
the issued and outstanding shares of Laclede Chain Manufacturing Company and
(ii) all of Laclede Chain Manufacturing Company's machinery and equipment now
owned or thereafter acquired.  As of December 31, 1997, the Company is in
compliance with the remaining negative covenant contained in the Solid Waste
Revenue Bonds.

     During 1998 the Company anticipates capital expenditures of
approximately $6.0 million, and contributions to pension plans of $13.6
million.  Assuming that the Company is able to (i) maintain its existing level
of sales, (ii) avoid sales price decreases and (iii) capture savings from
productivity improvements, the Company will generate sufficient cash flow to
finance its 1998 liquidity requirements including the above referenced
expenditures.  If the Company is unable to maintain its existing level of sales
and current pricing or if the Company's productivity improvements fail to
produce positive financial results, the Company may not generate sufficient cash
flow to finance its 1998 liquidity requirements.  In such event, the Company
would evaluate other methods of generating cash flow such as the sale of
significant businesses or assets and refinancing transactions.  There can be no
assurance, however, that any such alternative could be successfully completed.

     In July 1996, the Company issued a total of $6.25 million in Series A
Preferred Stock to its largest stockholder, Ivaco Inc., and to executive
officers of the Company.  On October 28, 1996, at a special meeting of the
stockholders, an amendment was approved to the Company's Certificate of
Incorporation which reduced the par value of each share of common stock from
$13.33 per share to $0.01 per share and increased the number of authorized
common stock shares from 5,000,000 shares to 25,000,000 shares.  The
stockholders also approved the recapitalization of the Company's Series A 6%
preferred stock to convertible preferred stock.  At such time each share of the
preferred stock became convertible into common stock at the option of the
holder at a conversion price of $3.20 into 4.69 shares of common stock.  In
connection with the sale of Series A Preferred Stock to Ivaco Inc. and to
executive officers of the Company, the Company was required to use its best
efforts to obtain stockholder approval of the amendment to the Company's
Certificate of Incorporation.  In addition such approval was necessary in order
for the Company to pursue a rights offering to all of the Company's
stockholders, entitling all such stockholders to subscribe for Series A
Preferred Stock (the "Rights Offering").


                     - 15 -



     The Company, however, has postponed the Rights Offering until it
improves its operating results.  In this regard the Company implemented a
number of cost reduction and productivity improvement programs that improved
1997 results, and continues to study cost reduction options.  The Company does
not presently intend to proceed with the Rights Offering until operating
results have reached satisfactory levels and a long-term strategic plan has
been developed.  There can be no assurance when or if the Company will proceed
with a Rights Offering.

     At December 31, 1997, $76.5 million in borrowings were outstanding
under the Company's revolving credit facility, and unused availability totaled
$5.2 million.  Amounts available under this facility were utilized early in the
first quarter of 1998 to cover outstanding short-term commitments, primarily
trade accounts payable.

     In 1996 the Company experienced higher than expected retirements from
its hourly workforce at the Alton Plant.  This was particularly the result of
restructuring of operations and early retirement incentives offered in late
1996.  In addition in October 1997 the Company negotiated a new Labor Agreement
for hourly employees at the Alton Plant, which includes an increase in pension
benefits.  Despite the negative effect which these factors have on pension
costs, the Company does not anticipate an increase in required plan
contributions in 1998.  A planned change in the actuarial method of recognizing
gains in the market value of pension plan assets will have a favorable impact
on 1998 funding requirements, which should approximate the 1997 level.  Current
actuarial projections indicate that if the Company continues to make its
required minimum quarterly contributions, the Plan's funded percentage will
increase and future minimum funding requirements will decline somewhat from
1997 and 1998 levels.  Under the new actuarial method with respect to the
market value of pension plan assets, however, any material decrease in the
market value of pension plan assets could have a material adverse effect on the
Company's future pension funding requirements.  There can be no assurance that
the Company could fund such requirements.

     As discussed in Note 3 to the Consolidated Financial Statements, at
December 31, 1997 the Company has net deferred tax assets of $45.4 million.

     For tax purposes, the Company had available as of December 31, 1997,
net operating loss ("NOL") carryforwards for regular federal income tax
purposes of approximately $68,100,000.  These NOL carryforwards expire as
follows:

               2008      $ 7,600,000
               2009          900,000
               2010       14,900,000
               2011       27,200,000
               2012       17,500,000


                     - 16 -



     Additionally, in conjunction with the Alternative Minimum Tax Rules
("AMT"), the Company had available AMT credit carryforwards of approximately
$2,500,000, which may be used indefinitely to reduce regular federal income
taxes.

     Management believes that it is more likely than not that all of the NOL
carryforwards will be utilized prior to their expiration.  The NOL
carryforwards, as well as the existing deductible temporary differences, with
the exception of differences relating to the minimum pension liability
adjustment and the postretirement benefits, are largely offset by the existing
taxable temporary differences relating to accelerated depreciation which will
reverse within the carryforward period.  Furthermore, any recorded deferred tax
assets associated with these future tax benefits which would not be offset by
the reversal of the accelerated depreciation are expected to be realized by the
achievement of future profitable operations.  The Company experienced
profitable operations in 1993, 1994 and 1995, exclusive of nonrecurring/unusual
charges in connection with restructuring and modifying the operations of the
Company.  While the Company experienced significant operating losses in 1996,
management believes 1997 would have been a profitable year were it not for the
unanticipated losses associated with the union contract negotiations, the
related decrease in productivity in the periods surrounding the termination of
the contract and the year-end inventory write-offs.  Additionally, management
currently expects operations in 1998 to return to profitability.

     The Company operates in a highly cyclical industry and consequently has
had a history of generating operating profits over an average business cycle
despite periods of operating losses within a cycle.  Consequently, the Company
has had a history of generating NOL carryforwards and then utilizing such NOL
carryforwards to reduce regular income taxes in future periods.  During the
period 1981 to 1984 the Company utilized $2,700,000 of NOL carryforwards to
reduce federal income taxes.  Thus, management believes that no valuation
allowance is necessary for these deferred tax assets at this time.

     The Company has recorded deferred tax benefits associated with
postretirement obligations and additional minimum pension liabilities of
approximately $45,000,000 as of December 31, 1997.  The Company should have
deductible differences for tax purposes which greatly exceed the corresponding
deductions for financial reporting purposes in future years.  These
liabilities, which are based on actuarial calculations, are expected to be paid
and deductible over the remaining lives of current and retired employees.  Any
tax losses in future years associated with these deductible payments will be
subject to the 15-year NOL carryforward period provided under current tax law.
Because of the extremely long period of time that is available to realize these
future tax benefits, a valuation allowance for these deferred tax assets is not
deemed necessary.



                     - 17 -



     In making these determinations regarding the ultimate realization of
the deferred tax assets, the Company is governed by the provisions of FAS 109,
which requires that when management is relying on future taxable income to
support the position that no valuation allowance is necessary, projections of
future operations must be substantially based on historical operating results,
as adjusted for unusual/nonrecurring items.  Management believes the
Company-wide cost reductions and productivity improvements implemented in the
last two years will return the Company to profitability in 1998.  However, if
operating losses should occur in fiscal 1998, it would represent the fourth
successive loss year on an unadjusted basis, and under the provisions of FAS
109, a valuation allowance would likely be required and such valuation
allowance would possibly be required on the entire deferred tax asset of
$45,400,000.  A valuation allowance of this magnitude would eliminate the
Company's net worth and under the current Bank Loan and Security Agreement,
result in a violation of the Company's net worth covenant in such agreement.

     Under Section 382 of the Internal Revenue Code of 1986, as amended, if
the percentage of stock (by value) of a corporation (the "Loss Corporation")
that is owned by one or more "five-percent shareholders" has increased by more
than 50 percentage points over the lowest percentage of stock owned by the same
shareholders during a three year testing period (an "Ownership Change"), the
use of pre-ownership change net operating losses of the Loss Corporation
following such Ownership Change will be limited based on the value of the Loss
Corporation immediately before the Ownership Change occurs (a "Section 382
Limitation").  As of December 31, 1997, the Company had a deferred tax asset of
approximately $30,000,000 related to net operating loss and alternative minimum
tax carryovers.  Although the Company believes that the transactions
consummated pursuant to the Purchase Agreement between Ivaco and Birmingham
Steel on September 26, 1997 should not result in an Ownership Change, future
transactions involving persons who are not or who during the ensuing thirty-six
month period become "five-percent shareholders" as defined in Section 382 may
trigger an Ownership Change.  If such an Ownership Change occurs, the Company's
use of its existing net operating loss carryovers at such time will be subject
to a Section 382 Limitation based on the value of the Company on the date of
such an Ownership Change.  Depending on the size of such net operating loss
carryovers at such time the limitation could have a material adverse effect on
the Company's financial statements.

Year 2000 Matters

     The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year.  Any of the
Company's computer programs that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000.  This could result
in a


                     - 18 -



system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send
invoices, or engage in similar normal business activities.

     In 1996, the Company initiated a conversion from existing accounting
software to programs that are year 2000 compliant.  Management believes that
the
year 2000 issue will not pose significant operational problems for its computer
systems.  As a result, all costs associated with this conversion are being
expensed as incurred and are not expected to have a material adverse effect on
the results of operations.  The conversion is expected to be completed in 1998.

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995

     The foregoing Management's Discussion and Analysis and other portions
of this report on Form 10-K, contain various "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Sections 21E of the Securities Exchange Act of 1934, as amended, which
represent the Company's expectations or beliefs concerning future events,
including the following:  statements regarding the overall demand for steel;
statements regarding the ability to maintain sales
prices; statements regarding productivity improvement programs; statements
regarding the Company's profitability; statements regarding future borrowing
capacity; and statements regarding future pension funding requirements.  In
addition, statements containing expressions such as "believes," "anticipates"
or "expects" used in the Company's periodic reports on Forms 10-K, 10-Q and 8-K
filed with the SEC are intended to identify forward-looking statements.
Forward-looking statements by the Company and its management are based on
estimates, projections, beliefs and assumptions of management and are not
guarantees of future performance.  The Company disclaims any obligation to
update or revise any forward-looking statement based on the occurrence of
future events, the receipt of new information, or otherwise.  The Company
cautions that these and similar statements included in this report and in
previously filed periodic reports including reports filed on Forms 10-K, 10-Q
and 8-K and further qualified by important factors that could cause actual
results to differ materially from those in the forward-looking statement,
including, without limitation, the following:  decline in sales prices for
steel products; increases in the cost of steel scrap; failure to obtain
significant benefits from the Company's cost reduction and productivity
improvement programs; increased domestic or foreign steel competition and
decreases in the market value of the Company's qualified pension plan assets.

     Item 8.   Financial Statements and Supplementary Data.

     The index to the Financial Statements of the Company and the
independent auditors' report of Deloitte & Touche LLP appear on pages 27 and
53.

                     - 19 -



     Item 9.   Changes in and Disagreements with Accountants on Accounting and
               Financial Disclosure.

                      NONE

                    PART III

     Item 10.  Directors and Executive Officers of the Company.

     (a)  Certain information with respect to each of the directors of
          the Company is set forth below, including any positions they
          hold with the Company and their business experience the past
          five years:

Name, Age, Other Positions with the Company,         Served as
Principal Occupation and Directorships of            a Director
Other Companies                                         Since

Joseph Alvarado, 45. . . . . . . . . . . . . . .       1997
     Executive Vice President-Commercial of
     Birmingham Steel Corporation ("Birmingham
     Steel") (mini-mill steel producer) (1997
     to date); President, Inland Steel Bar
     Company (steel bar producer) (1995 to 1997);
     Vice President & General Manager-Sales &
     Marketing, Inland Steel Bar Company (1988
     to 1994).

Robert A. Garvey, 60. . . . . . . . . . . . . .        1997
     Chairman of the Board and Chief Executive
     Officer of Birmingham Steel (mini-mill steel
     producer) (January 5, 1996 to date); President
     of North Star Steel (1984 to 1996).  Director
     of Birmingham Steel.

Michael H. Lane, 55 . . . . . . . . . . . . . .        1997
     Vice President-Finance, Treasurer and Secretary
     of the Company (January 1983 to date).

William R. Lucas, Jr., 42 . . . . . . . . . . .        1997
     Executive Vice President-Administration and
     General Counsel of Birmingham Steel (mini-
     mill steel producer) (1996 to date); Executive
     Vice President & General Counsel of Birmingham
     Steel (1995-1996); Managing Partner of Lightfoot,
     Franklin, White & Lucas (law firm) (1990 to
     1995).

Wayne P. E. Mang, 60  . . . . . . . . . . . . .        1997
     President and Chief Operating Officer, Russel
     Metals (steel product processor and
     distributor) (1982 to 1997).  Director of
     Wainbee Ltd. and Maverick Tube Corporation.



                     - 20 -



Name, Age, Other Positions with the Company,         Served as
Principal Occupation and Directorships of            a Director
Other Companies                                         Since

Philip R. Morgan, 49  . . . . . . . . . . . . .        1997
     President and Chief Executive Officer,
     Morgan Construction Company (supplier of
     steel rolling mill technology and equipment)
     (1986 to date).

Robert H. Quenon, 69  . . . . . . . . . . . . .        1992
     Mining Consultant (1991 to date); Chairman
     of the Board, Federal Reserve Bank of
     St. Louis (1993 to 1995); Chairman (1990
     to 1991) and President and Chief Executive
     Officer (1983 to 1990) of Peabody Holding
     Company, Inc. (coal mining and sales);
     Director of Ameren Corporation and Newmont
     Gold Co.

George H. Walker III, 66  . . . . . . . . . . .        1990
     Chairman of the Board, Stifel Financial
     Corp. (investment banking firm) and its
     principal subsidiary, Stifel, Nicolaus &
     Company, Incorporated (stock brokerage
     firm) (1979 to date); Director of Laidlaw
     Corp. and EAC Corporation

     The executive officers of the Company and their ages are as follows:

     Name           Age            Position

John B. McKinney         65    President, Chief Executive
                               Officer and Director-Retired
                               in February 1998

Thomas E. Brew, Jr.      55    President and Chief
                               Executive Officer effective
                               February 26, 1998

Michael H. Lane          55    Vice President-Finance,
                               Treasurer and Secretary

J. William Hebenstreit   52    Vice President-Operations

Larry J. Schnurbusch     51    Vice President-Administration

H. Bruce Nethington      56    Vice President-Human
    Resources


     John B. McKinney was elected President and Chief Executive Officer of
the Company in January 1983.  Mr. McKinney was a director of the Company from
1981 until he retired in February 1998.


                     - 21 -



     Thomas E. Brew, Jr. of Argus Management Corporation was elected
President and Chief Executive Officer by the Board of Directors on February 26,
1998.  Mr. Brew has been Executive Vice President of Argus Management
Corporation (a consulting firm) since July 1997.  From November 1994 until July
1997 Mr. Brew was President, CEO and Chairman of the Board of Directors of
Kurzweil Applied Intelligence, Inc. (a software development company).  Prior to
1994 Mr. Brew served as Executive Vice President of Argus Management
Corporation.

     Michael H. Lane was elected Vice President-Finance, Treasurer and
Secretary of the Company in 1983.  Mr. Lane was elected to the Board of
Directors in 1997.

     J. William Hebenstreit was elected Vice President-Operations of the
Company in 1983.

     Larry J. Schnurbusch was elected Vice President-Administration in 1993.
Prior to 1993, he served as Director of Corporate Administration of the
Company.

     H. Bruce Nethington was elected Vice President-Human Resources in 1993.
Prior to 1993, he served as Director of Industrial Relations of the Company.

     Item 11.  Executive Compensation.

     The following table presents summary information concerning
compensation for services rendered to the Company during each of the last three
fiscal years by those persons who at December 31, 1997 were the Chief Executive
Officer and the other executive officers.
<TABLE>
<CAPTION>
           Summary Compensation Table

                                Annual Compensation
                                                    Other Annual  All Other
 Name and                               Bonus       Compensation  Compensation
Principal Position    Year   Salary($)   ($)(1)     ($)(2)        ($)(3)
<S>                   <C>    <C>        <C>         <C>           <C>

John B. McKinney(4)   1997   $364,500     $   --        $ 29,025  $39,761
President and Chief   1996    364,500         --         288,923  39,471
Executive Officer     1995    364,500         --         562,528  36,848

J. W. Hebenstreit     1997   $243,504     $   --        $ 10,223  $17,746
Vice President-       1996    243,504         --         156,875   17,678
Operations            1995    243,504         --         312,005   12,915

Michael H. Lane(5)    1997   $243,504     $   --        $ 13,101  $19,773
Vice President-       1996    243,504         --         190,293   19,767
Finance, Treasurer    1995    243,504         --         339,222   14,964
and Secretary

Larry J. Schnurbusch  1997   $178,008     $   --        $ 75,724  $11,477
Vice President-       1996    178,008         --         122,503   11,431
Administration        1995    178,008         --         125,771    6,943

H. Bruce Nethington   1997   $167,508     $   --        $ 45,929  $13,282
Vice President-       1996    167,508         --         121,596   13,282
Human Resources       1995    167,508         --         145,307    8,921
</TABLE>
(1)  No bonuses were earned under the Company's
     Discretionary Incentive Compensation Plan
     for 1997, 1996 or 1995.

                     - 22 -



(2)  Amounts reported as Other Annual Compensation consist primarily of income
     tax payments related to Company contributions to the Key Employee
     Retirement Plan.  Such contributions represent taxable income to Plan
     participants and, under the terms of the Plan, the Company is obligated to
     reimburse participants for the payment of such taxes.

     Certain perquisites which the executive officers received in 1995, 1996
     and 1997 the aggregate amount of which did not exceed the lesser of
     $50,000 or 10% of any such officer's salary and bonus, are not
     included in other Annual Compensation.

(3)  The amounts shown represent life insurance premiums paid by the Company on
     behalf of the executive officers and matching amounts paid by the Company
     under the profit sharing plan.

(4)  Mr. McKinney retired from the Company on February 28, 1998.

(5)  Mr. Lane has entered into an amendment to his employment agreement with
     the Company, see "Employment Contracts" below.

     The Company did not grant any stock appreciation rights or stock options
     in 1997 and all aspects of prior plans have expired.

                  Benefit Plans

     The Company maintains the Laclede Salaried Employees' Pension Plan (the
"Pension Plan"), a defined benefit plan which provides a monthly pension to
salaried employees of the Company (excluding employees covered by a collective
bargaining agreement) who retire or terminate with vested rights in accordance
with the provisions of the Pension Plan.  Benefits are based upon years of
credited service and covered compensation, offset by the participant's Primary
Insurance Amount under the Federal Social Security Act.  The Company also
maintains the Key Employee Retirement Plan (the "Supplement Plan"), the purpose
of which is to provide additional retirement income to certain key employees of
the Company, including certain of the executive officers.  Under the
Supplement Plan, the eligible employees were guaranteed that the total amount
received by them each year during retirement from the Pension Plan, Federal
Social Security and the Supplement Plan would be equal to 70% of the average of
their highest aggregate three consecutive calendar year salary and bonus during
their last 10 years of employment with the Company ("Salary Level"), assuming
retirement at age 60.  In connection with a Company-wide cost reduction program
initiated in 1996, in October 1996 the executive officers agreed to a reduction
in retirement benefits under the Supplement Plan by a change in the percentage
of Salary Level benefits from 70 to 65%.  If the employee retires prior to age
60, the applicable percentage of the Salary Level will be reduced 2.5% for each
year of retirement age below age 60.


                     - 23 -



     The aggregate annual benefits payable
pursuant to the Pension Plan, the Supplement
Plan and Federal Social Security at various
assumed salary levels and retirement ages are
summarized as follows:
<TABLE>
<CAPTION>
                                                 Estimated Annual Retirement
                                            Benefit at the Respective Ages
Listed
Salary Level*                           50          53          56        60
<S>                                 <C>         <C>         <C>       <C>
175,000 . . . . . . . . . . . . .   $ 85,313    $ 93,844    $102,375  $113,750
225,000 . . . . . . . . . . . . .    109,688     120,656     131,625   146,250
275,000 . . . . . . . . . . . . .    134,063     147,469     160,875   178,750
325,000 . . . . . . . . . . . . .    158,438     174,281     190,125   211,250
375,000 . . . . . . . . . . . . .    182,813     201,094     219,375   243,750
425,000 . . . . . . . . . . . . .    207,188     227,906     248,625   276,250
475,000 . . . . . . . . . . . . .    231,563     254,719     277,875   308,750
525,000 . . . . . . . . . . . . .    255,938     281,531     307,125   341,250
575,000 . . . . . . . . . . . . .    280,313     308,344     336,375   373,750
625,000 . . . . . . . . . . . . .    304,688     335,156     365,625   406,250
675,000 . . . . . . . . . . . . .    329,063     361,969     394,875   438,750
</TABLE>
*    Salary level assumes the average of the
     highest average aggregate three
     consecutive calendar year earnings for
     eligible executive officers during the
     last ten years of their employment.

     Messrs. McKinney, Hebenstreit, Lane, Schnurbusch and Nethington have
accumulated 41, 30, 25, 29 and 30 credited years of service, respectively.  The
current salary level for each of the executive officers eligible for benefits
under the Supplement Plan is:  Mr. McKinney, $547,243; Mr. Hebenstreit
$326,193; Mr. Lane, $326,193; Mr. Schnurbusch, $221,627; and Mr. Nethington,
$193,919.  Upon termination of employment, a covered employee or his
beneficiary at any time prior to commencement of benefits under the Supplement
Plan may select the payment of all benefits due under the Supplement Plan in
one lump sum payment.  The Supplement Plan's funds are held and invested by a
trustee.  As a result of Mr. Nethington's planned retirement on April 30, 1998,
the Company will be obligated to make an additional aggregate payment of
approximately $530,000 to Mr. Nethington, which Mr. Nethington and the Company
have agreed will be paid in five monthly installments.  In addition the Company
will reimburse Mr. Nethington for amounts necessary to cover taxes incurred on
account of benefits payable under the Supplement Plan.  Pursuant to the
November 14, 1990 amendment to the Supplement Plan (the "1990 Amendment") the
funds held under the Supplement Plan for Messrs. McKinney, Hebenstreit and Lane
were transferred to separate trusts under which the employees participating in
the Supplement Plan were the direct beneficiaries.  Because such trusts are
fully funded, the Company will have no further payment requirements as a result
of the retirement of Mr. McKinney and the anticipated termination of employment
of Mr. Lane.

     The Company also maintains the Laclede Steel Company Salaried Employees'
Profit Sharing Plan (the "Profit Sharing Plan") for the purposes of encouraging
eligible employees to develop initiative and productivity and providing the
employees



                     - 24 -



with additional retirement benefits.  The Profit Sharing Plan is intended to
qualify as a cash deferred compensation arrangement under Section 401(k) of the
Internal Revenue Code.  Salaried employees of the Company are eligible to
participate in the Profit Sharing Plan.

            Compensation of Directors

     Directors who are not otherwise employed by the Company receive a $1,125
monthly retainer and a per diem fee of $1,125, plus expenses, for Board or
committee meetings attended.  Directors who are not otherwise employed by the
Company, who are members of the Shareholder Value Enhancement Committee receive
a $500 monthly retainer fee.  The Chairman of the Board receives a $2,250
monthly retainer fee.

              Employment Contracts

     Messrs. McKinney, Hebenstreit, Lane, Schnurbusch and Nethington each has
an employment agreement with the Company (the "Employment Agreements").
Although Mr. McKinney left the Company on February 28, 1998, the Company will
continue to pay his annual salary of $364,500 and benefits through August
2, 1999, the termination date of his Employment Agreement.  On March 24,
1998, Mr. Lane and the Company entered into an amendment to his Employment
Agreement providing that Mr. Lane will continue as Vice President-Finance,
Treasurer and Secretary of the Company until the earlier of September
20, 1998 or a date determined by the President of the Company.  After
termination of his employment, the Company will continue to pay Mr. Lane his
minimum annual salary of $243,500 and benefits until the later of August 2,
1999 or twelve months from Mr. Lane's termination date.  Effective July 30,
1996 the Employment Agreement of Mr. Hebenstreit provides for a minimum salary
of $243,500 for his services as Vice President-Operations.  Also effective July
30, 1996, Mr. Schnurbusch's Employment Agreement provides for a minimum salary
of $178,000 for his services as Vice President-Administration.  The Employment
Agreements for Messrs. Hebenstreit and Schnurbusch continue through August 2,
1999.  Mr. Nethington's Employment Agreement provides for a minimum salary of
$167,500 which will be paid until April 30, 1998, the date of his retirement
from the Company.

     Item 12.  Security Ownership of Certain
               Beneficial Owners and
               Management.

     The following information is furnished with respect to each person known
by management of the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock of the Company, each director of the Company, each
executive officer of the Company and all directors and executive officers as a
group.  The information is furnished as of March 3, 1998.




                     - 25 -


<TABLE>
<CAPTION>

                                                                          Shares of
                                                                          Series A
                                    Shares of                           Preferred
                                  Common Stock                            Stock
Name and Address of               Beneficially         Percent of     Beneficially        Percent of
Beneficial Owner                    Owned (1)            Class            Owned(1)          Class
<S>                               <C>                  <C>            <C>                 <C>
Birmingham Steel Corporation (2)   2,038,650             50.26% (3)     366,667             88.00%
1000 Urban Center Drive, Suite 300
Birmingham, AL  35242

Ivaco Inc. (2) . . . . . .         1,009,325             24.88% (3)     183,333             44.00%
Place Mercantile
770 rue Sherbrooke ouest
Montreal, Quebec, Canada H3A 1G1

Joseph Alvarado (4). . . .               100               *                 --                --
Robert A. Garvey (4) . . .               375               *                 --                --
J. W. Hebenstreit  . . . .            10,000               *             21,667              5.20%

Michael H. Lane  . . . . .            10,600               *              5,000              1.20%
William R. Lucas, Jr. (4).               100               *                 --                --
Wayne P. E. Mang . . . . .               100               *                 --                --

Thomas E. Brew, Jr.  . . .                --               *                 --                --
Philip R. Morgan . . . . .             1,000               *                 --                --
H. Bruce Nethington  . . .             1,000               *              5,000              1.20%

Robert H. Quenon . . . . .               300               *                 --                --
Larry J. Schnurbusch . . .             7,730               *              5,000              1.20%
George H. Walker III . . .             1,000 (5)           *                 --                --

All Directors and Executive
Officers as a Group
(12 persons) . . . . . . .            32,305               *             36,667              8.8%
</TABLE>
*    Represents less than one percent of the outstanding Common Stock of the
     Company.

(1)  Beneficial ownership of shares, as determined in accordance with
     applicable Securities and Exchange Commission rules, includes shares as
     to which a person directly or indirectly has or shares voting power
     and/or investment power.  Unless otherwise indicated, each holder
        has sole voting and investment power over the shares reported.

(2)  On September 26, 1997, a subsidiary of Ivaco Inc. ("Ivaco"), sold
     one-half of the Ivaco investment in the Company to a wholly-owned
     subsidiary of Birmingham Steel Corporation ("Midwest Holdings").  The
     securities of the Company sold consisted of 1,009,325 common shares
     and 183,334 shares of the Company's Series A preferred stock.  The
     preferred shares are convertible into 859,834 common shares of the
     Company.  The transaction was effected through the sale of a
     wholly-owned subsidiary of Ivaco which contained such shares to
     Midwest Holdings.  In connection with the transaction Ivaco, among
     other things, gave Midwest Holdings the voting rights on Ivaco's
     remaining investment in the Company's common stock and, in any
     additional common stock Ivaco may own as a result of the conversion of
     Ivaco's remaining Series A preferred stock, subject to certain
     limitations.  In addition, Ivaco agreed not to sell any portion of its
     remaining investment in the Company prior to September 24, 1998 and
     has provided Midwest Holdings with a limited right



                     - 26 -



     of first refusal with respect to such interests until September 24,
     2002.  This information is based upon Schedule 13D forms of Ivaco and
     Birmingham Steel, filed on September 30, 1997 and October 6, 1997,
     respectively.

(3)  Pursuant to Securities and Exchange Commission rules, the Ivaco shares
     subject to the proxy referred to in footnote (2) above are reflected
     as owned by both Ivaco and Birmingham Steel.

(4)  Mr. Garvey is Chairman of the Board and Chief Executive Officer of
     Birmingham Steel.  Messrs. Alvarado and Lucas are executive officers
     of Birmingham Steel.  As a result of such positions, such individuals
     may be deemed beneficial owners of the Company shares beneficially
     owned by Birmingham Steel.  Each of these individuals disclaims such
     beneficial ownership.

(5)  Does not include 1,000 shares of Common Stock owned by Mr. Walker's
     wife.  Mr. Walker disclaims beneficial ownership of
     such shares.

          Item 13.  Certain Relationships and Related Transactions.

     In 1997, the Company engaged Stifel, Nicolaus & Company, Incorporated
to assist in obtaining approval of changes to financial covenants and
collateral arrangements on its Solid Waste Revenue Bonds.  Mr. George H.
Walker III, a Company Director, is the Chairman of the Board of Stifel
Financial Corporation, the parent of Stifel, Nicolaus & Company, Incorporated.
The Company paid a fee for these services of approximately $70,000.

                     PART IV


     Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form
               8-K.

     (a)  Documents Filed as Part of This Report

     The following is an index of the financial statements and schedules
included in this Report.

         (1)   Financial Statements

               LACLEDE STEEL COMPANY AND SUBSIDIARIES



                                                             Page
Consolidated Statements of Operations for the years ended
  December 31, 1997, 1996 and 1995 . . . . . . . . . . . . .  31
Consolidated Balance Sheets, December 31, 1997 and 1996  . .  32


                     - 27 -





                                                            Page

Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1997, 1996 and 1995. . . . . . . .  34
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995. . . . . . . . . . . . . .  35
Notes to Consolidated Financial Statements  . . . . . . . .  36
Independent Auditors' Report on Financial Statements. . . .  53

         (2)   Consolidated Financial Statement Schedules

                      NONE

         (3)   Exhibits

     The following is an index of the exhibits included in this Report or
incorporated herein by reference.

     (3)(a)    Registrant's Certificate of Incorporation as restated
               October 28 1996.  (Incorporated by reference to Exhibit (3) in
               Registrant's Quarterly Report on Form 10-Q for September 30,
               1996.)

     (3)(b)    By-laws of Registrant amended December 19, 1997.

     (4)(a)    Registrant's Loan and Security Agreement dated as of September
               7, 1994 amended and restated as of August 20, 1997.
               (Incorporated by reference to Exhibit (4)(a) in Registrant's
               Quarterly Report on Form 10-Q for September 30, 1997.)

     (4)(b)    First Amendment dated December 30, 1997 to the Company's
               Restated Loan and Security Agreement.

     (4)(c)    Second amendment effective March 27, 1998 to the Company's
               Restated Loan and Security Agreement.

     (4)(d)    Certificate of Designation of Series A Preferred Stock dated
               July 30, 1996.  (Incorporated by reference to Exhibit (4)(i) in
               the Registrant's Quarterly Report on Form 10-Q for June 30,
               1996.)

     (10)(a)   Discretionary incentive compensation plan for Executive
               Officers of the Registrant.  (Incorporated by reference to
               Exhibit (10)(a) in Registrant's Annual Report on Form 10-K for
               the fiscal year ended December 31, 1993.)




                     - 28 -




     (10)(b)   Stock Purchase Agreement dated July 30, 1996 between Ivaco Inc.
               and Laclede Steel Company.  (Incorporated by reference to
               Exhibit (10)(a) of Registrant's Quarterly Report on Form 10-Q
               for June 30, 1996.)

     (10)(c)   Management Stock Purchase Agreements dated July 30, 1996
               between Laclede Steel Company and John B. McKinney, Michael H.
               Lane, J. William Hebenstreit, Larry J. Schnurbusch and H.
               Bruce Nethington.  (Incorporated by reference to Exhibit (10)(b)
               of Registrant's Quarterly Report on Form 10-Q for June 30,
               1996.)

     (10)(d)   Restated Employment Agreements dated as of July 30, 1996
               between Laclede Steel Company and John B. McKinney, Michael H.
               Lane, J. William Hebenstreit, Larry J. Schnurbusch and H.
               Bruce Nethington.  (Incorporated by reference to Exhibit (10)(c)
               of Registrant's Quarterly Report on Form 10-Q dated June 30,
               1996.)

     (10)(e)   Amendment dated as of March 24, 1998 to the Restated Employment
               Agreement between Laclede Steel Company and Michael H. Lane.

     (10)(f)   Registration Rights Agreement dated July 30, 1996 between
               Laclede Steel Company and Ivaco Inc., John B. McKinney, Michael
               H. Lane, J. William Hebenstreit, Larry J. Schnurbusch and H.
               Bruce Nethington.  (Incorporated by reference to Exhibit (10)(d)
               of Registrant's Quarterly Report on Form 10-Q dated June 30,
               1996.)

     (10)(g)   Restated Key Employee Retirement Plan dated October 16, 1996.
               (Incorporated by reference to Exhibit (10)(g) in Registrant's
               Annual Report on Form 10-K for the fiscal year ended December
               31, 1996.)

     (10)(h)   Asset Purchase Agreement dated January 10, 1997 between
               Excaliber Tubular Corporation and Laclede Steel Company.
               (Incorporated by reference to Exhibit (10)(h) in Registrant's
               Annual Report on Form 10-K for the fiscal year ended December
               31, 1996.)








                     - 29 -



     (21)      Subsidiaries of Registrant.

               Instruments with respect to long-term debt issues have been
               omitted where the amount of securities authorized under such
               instruments does not exceed 10% of the total consolidated assets
               of the Registrant.  Registrant hereby agrees to furnish a copy
               of any such instrument to the Commission upon its request.

               NOTE
                    Copies of exhibits will be supplied upon written
                    request and payment of the Registrant's fee of $.25
                    per page requested.

                    (b)  Reports on Form 8-K

          Form 8-K reporting on Item 1 - Change in Control of Registrant under
          a Purchase Agreement dated as of September 26, 1997 was filed on
          October 3, 1997.

          Form 8-K reporting on Item 1 - Change in Control of Registrant filed
          on October 14, 1997 reporting that on October 8, 1997 the Company
          appointed three of Birmingham Steel's executive officers to the Board
          of Directors of the Company.




























                     - 30 -
<TABLE>


LACLEDE STEEL COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations
(In Thousands of Dollars except Per Share Amounts)

<CAPTION>
                                               Year Ended December 31,
                                               1997       1996       1995
<S>                                            <C>        <C>        <C>
NET SALES                                      $ 325,029  $ 335,381  $ 320,350


COSTS AND EXPENSES:
 Cost of products sold                           299,570    316,954    286,632

 Selling, general and
    administrative expenses                       13,654     14,201     14,209

 Depreciation                                      7,696      7,743      8,151

 Interest expense, net                            10,046     11,163     10,125

 Restructuring, asset impairment
    and other charges                               ----      1,559     18,422

 Gain on sale of subsidiary stock                   ----       ----       (728)

 Gain on sale of facility                           (987)      ----       ----

 Total costs and expenses                        329,979    351,620    336,811


LOSS BEFORE INCOME TAXES                          (4,950)   (16,239)   (16,461)


INCOME TAX BENEFITS                               (1,943)    (6,254)    (6,324)


NET LOSS                                       $  (3,007) $  (9,985) $ (10,137)

PREFERRED STOCK DIVIDEND REQUIREMENT                (375)      (156)      ----

NET LOSS AVAILABLE TO COMMON
   SHAREHOLDERS                                $  (3,382) $ (10,141) $ (10,137)

BASIC AND DILUTED
   NET LOSS PER SHARE                          $   (0.83) $   (2.50) $   (2.50)

</TABLE>

See Notes to Consolidated Financial Statements.



- 31 -

<PAGE>
<TABLE>
LACLEDE STEEL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
Assets
(In Thousands of Dollars)
<CAPTION>
                                                          December 31,
                                                          1997       1996
<S>                                                       <C>        <C>
CURRENT ASSETS:
 Cash and cash equivalents                                $     186  $     143
 Accounts receivable, less allowances
  of $2,412 in 1997 and $2,428 in 1996                       40,282     38,772
 Prepaid expenses                                             1,238        443
 Inventories:
  Finished                                                   45,823     46,631
  Semi-finished                                              18,166     23,540
  Raw materials                                               4,681      5,218
  Supplies                                                   14,136     14,720
 Total inventories                                           82,806     90,109

 Total current assets                                       124,512    129,467


NON-CURRENT ASSETS:
 Intangible pension asset                                    14,652     14,464
 Other intangible assets                                      2,119      2,263
 Bond funds in trust                                          2,385      2,385
 Prepaid pension contributions                                5,441      5,766
 Deferred income taxes                                       45,400     47,557
 Notes receivable                                             3,396      3,600
 Other                                                        4,897      4,104
 Total non-current assets                                    78,290     80,139


PLANT AND EQUIPMENT, AT COST:
 Land                                                         1,499      1,589
 Buildings                                                   27,681     28,591
 Machinery and equipment                                    210,490    215,444
                                                            239,670    245,624
 Less - accumulated depreciation                            128,652    124,120
 Net plant and equipment                                    111,018    121,504


TOTAL ASSETS                                              $ 313,820  $ 331,110

</TABLE>




- 32 -

<TABLE>

Liabilities and Stockholders' Equity

<CAPTION>
                                                          December 31,
                                                          1997       1996
<S>                                                       <C>        <C>
CURRENT LIABILITIES:
 Accounts payable                                         $  42,682  $  41,293
 Accrued compensation                                         6,269      6,780
 Current portion of long-term debt                            2,356      2,484
 Accrued costs of pension plans                              13,577     14,049
 Other                                                        3,729      2,860
 Total current liabilities                                   68,613     67,466



NON-CURRENT LIABILITIES:
 Accrued costs of pension plans                              36,864     53,181
 Accrued postretirement medical benefits                     75,864     79,782
 Other                                                        2,221      5,547
                                                            114,949    138,510

LONG-TERM DEBT                                              109,157    107,889



COMMITMENTS AND CONTINGENCIES - NOTE 9                         ----       ----



STOCKHOLDERS' EQUITY:
 Preferred stock, no par value, authorized 2,000,000
  shares; issued and outstanding 416,667 shares                  83         83
 Common stock, $.01 par value, authorized 25,000,000
  shares; issued and outstanding 4,056,140 shares                41         41
 Capital in excess of par                                    59,763     60,138
 Accumulated deficit                                        (15,307)   (12,300)
 Minimum pension liability adjustment                       (23,479)   (30,717)
 Total stockholders' equity                                  21,101     17,245


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $ 313,820  $ 331,110
</TABLE>

See Notes to Consolidated Financial Statements.



- 33 -

<PAGE>
<TABLE>
LACLEDE STEEL COMPANY AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(In Thousands of Dollars)

<CAPTION>

                                               Year Ended December 31,
                                               1997       1996       1995
<S>                                            <C>        <C>        <C>
Preferred stock
  (416,667 shares issued)
  Beginning balance                            $      83  $      --  $      --
  Sale of convertible preferred stock                 --         83         --
  Ending balance                                      83         83         --

Common stock - $0.01 par value
  (4,056,140 shares issued)
  Beginning balance                                   41     54,081     54,081
  Reduction in par value of common stock              --    (54,040)        --
  Ending balance                                      41         41     54,081

Capital in excess of par value
  Beginning balance                               60,138        247        247
  Sale of convertible preferred stock                 --      6,007         --
  Reduction in par value of common stock              --     54,040         --
  Dividend requirement on convertible
    preferred stock                                 (375)      (156)        --
  Ending balance                                  59,763     60,138        247

Retained earnings (deficit)
  Beginning balance                              (12,300)    (2,315)     7,822
  Net loss                                        (3,007)    (9,985)   (10,137)
  Ending balance                                 (15,307)   (12,300)    (2,315)

Minimum pension liability
  Beginning balance                              (30,717)   (35,495)    (8,407)
  Change                                           7,238      4,778    (27,088)
  Ending balance                                 (23,479)   (30,717)   (35,495)


Total Stockholders' Equity at End of Year      $  21,101  $  17,245  $  16,518

</TABLE>

See Notes to Consolidated Financial Statements.







- 34 -

<PAGE>
<TABLE>
LACLEDE STEEL COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands of Dollars)
<CAPTION>
                                                       Year Ended December 31,
                                                       1997       1996       1995
<S>                                                    <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                              $  (3,007) $  (9,985) $ (10,137)
 Adjustments to reconcile net loss to net
  cash provided by (used in) operating activities:
   Depreciation                                            7,696      7,743      8,151
   Gain on sale of subsidiary stock                         ----       ----       (728)
   Gain on sale of facility                                 (987)      ----       ----
   Restructuring, asset impairment and other charges        ----      1,559     18,422
   Change in deferred income taxes                        (2,279)    (6,424)    (6,185)
   Changes in assets and liabilities
      that provided (used) cash:
     Accounts receivable                                  (1,510)    (1,485)     8,300
     Inventories                                           3,504     17,173    (12,483)
     Accounts payable and accrued expenses                (2,983)    10,306     (8,861)
     Pension cost less than funding                       (4,977)    (5,429)    (2,526)
     Accrued postretirement medical benefits              (3,918)    (1,649)     1,162
 Net cash provided by (used in) operating activities      (8,461)    11,809     (4,885)

CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures                                     (3,016)   (10,726)   (13,847)
 Proceeds from sale of assets                             10,972      4,000       ----
 Net cash provided by (used in) investing activities       7,956     (6,726)   (13,847)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Net borrowing (repayments) under revolving credit loan      390     (8,415)    18,453
 Proceeds from term loan                                   4,079       ----       ----
 Proceeds from long-term debt                               ----       ----      2,000
 Payments on long-term debt                               (3,329)    (2,462)    (2,488)
 Proceeds from sale of stock of subsidiary                  ----       ----      1,000
 Proceeds from issuance of convertible preferred stock      ----      6,090       ----
 Payment of financing costs                                 (592)      (314)      (231)
 Net cash provided by (used in) financing activities         548     (5,101)    18,734

CASH AND CASH EQUIVALENTS:
 Net increase (decrease) during the year                      43        (18)         2
 At beginning of year                                        143        161        159
 At end of year                                        $     186  $     143  $     161

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION:
  Cash paid during the year for:
   Interest (net of amount capitalized)                $  10,057  $  10,476  $  10,209
   Income tax payments (refunds), net                  $     337  $  (1,317) $     794
</TABLE>

See Notes to Consolidated Financial Statements.



- 35 -


   Notes to Consolidated Financial Statements
Note 1
Nature of Operations:

     Laclede Steel Company and Subsidiaries (the Company) is a manufacturer of
carbon and alloy steel products, including pipe products, hot rolled products,
wire products and welded chain.  The Company's continuous butt weld pipe is
sold in the U.S. and Canada to distributors and manufacturers.  Hot rolled
products consist primarily of special quality bars sold to manufacturers to be
cold drawn or forged.  Wire products include high and low carbon wire, oil
tempered wire used for mechanical springs, overhead door springs, automotive
suspension and brake springs, and annealed wire and rod.  Laclede Chain
Manufacturing Company, a wholly-owned subsidiary, produces chain products and
also imports a significant amount of chain.  Approximately one-half of the
chain business is attributable to sales of anti-skid devices for trucks and
automobiles and the balance is in sales of hardware and industrial chain.

Note 2
Accounting Policies:

     The Company's significant accounting policies are summarized as follows:

Principles of Consolidation

     The consolidated financial statements include the accounts of Laclede
Steel Company and its wholly-owned subsidiaries.  All intercompany accounts and
transactions have been eliminated.

Cash Equivalents

     The Company considers all highly liquid debt instruments with a maturity
of three months or less at date of purchase to be cash equivalents.

Inventories

     Inventories of finished and semi-finished products, raw materials and
supplies are stated at the lower of cost, predominantly moving average, or
market.  Market determination is based on the net realizable value of the total
of the components of each major category of inventory.

Plant and Equipment

     Plant and equipment, consisting primarily of steelmaking and related
facilities, are carried at cost.  Major renewals and betterments are
capitalized, while replacements, rebuilding costs and repairs are charged to
operations.  The cost of normal retirements is charged to accumulated
depreciation and salvage realized, if any, is credited thereto.


                     - 36 -




Depreciation

     The Company follows the policy of providing for depreciation of plant and
equipment by charging operations with amounts sufficient to amortize the cost
over the following estimated useful lives:

          Buildings and improvements         20 to 45 years
          Machinery and equipment             4 to 25 years
          Office furniture and equipment      6 to 10 years

     Depreciation is computed on the straight-line method for financial
reporting purposes.

Impairment of Long-Lived Assets

     In 1995 the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.  The general
requirements of this statement are applicable to the properties and intangible
assets of the Company and require impairment to be considered whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable.  See Note 6 for discussion of asset impairment charges in
1995.

Other Intangible Assets

     Other intangible assets include the excess of the purchase price of
acquisitions over the fair value of the net assets acquired and these amounts
are amortized on a straight-line basis over 25 years.

     Management periodically reviews the value of its intangible assets to
determine if an impairment has occurred or whether changes have occurred that
would require a revision to the remaining useful life.  In making such
determination, management evaluates the performance, on an undiscounted basis,
of the underlying operations or assets which give rise to such amount.  Based
on this review, management does not believe that any such impairment has
occurred.

Income Taxes

     Deferred income taxes are provided for the temporary differences between
the tax basis of the Company's assets and liabilities and their financial
reporting amounts at each year end, utilizing currently enacted tax rates.  See
Note 3 for details of significant temporary differences.





                     - 37 -



Per Share Data and Preferred Stock Dividends

     Per share amounts for 1997, 1996 and 1995 have been calculated based on
weighted average shares outstanding of 4,056,140.  Net loss per share in 1997
and 1996 was computed by dividing the net loss, after deducting convertible
preferred dividend requirements of $375,000 in 1997 and $156,000 in 1996, by
the weighted average shares outstanding.

Use of Estimates in the Preparation of Financial Statements

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

Certain Significant Estimates

     Amounts reported for pensions and postretirement medical benefits and
their related deferred tax assets are subject to significant fluctuation due to
changes in interest rates.  Estimates of environmental remediation-related
obligations are discussed in Note 9.

Current Vulnerability Due to Certain Concentrations

     The Company manufactures steel from steel scrap generated in the course of
its steel production and purchased in the open market from numerous scrap
suppliers.  Since it does not produce its own raw materials, the Company
is subject to the fluctuation in prices and availability of scrap.

     Approximately 58% of the Company's production employees are covered by a
collective bargaining agreement, which expires in September 2001.

Note 3
Income Taxes:

     The provision for income taxes represents an effective combined federal
and state tax rate of 39% for 1997 and 1996 and 38% for 1995.  See the
reconciliation of these tax rates to the statutory rate below.  The provision
(credit) for income taxes consists of the following (thousands of dollars):

                                  1997       1996        1995

Current income taxes            $    336    $   170    $   (139)
Deferred income taxes             (2,279)    (6,424)     (6,185)
                                $ (1,943)   $(6,254)   $ (6,324)


                     - 38 -



     Deferred tax assets were decreased in 1997 by $4,436,000 and in 1996 by
$2,929,000 and increased in 1995 by $16,151,000, as a result of the tax effects
of the minimum pension liability adjustment.  These amounts are not reflected
in the tax provision of these years.  See Note 5 for further discussion.

     Deferred tax assets and liabilities are comprised of the following at
December 31 (thousands of dollars):

                                           1997        1996
Deferred tax liabilities:
  Depreciation                           $(29,621)   $ (28,549)
  Accrued costs of pension plans           (4,689)      (2,490)
    Total deferred tax liabilities        (34,310)     (31,039)

Deferred tax assets:
  Minimum pension liability adjustment     14,390       18,826
  Postretirement medical benefits          30,801       31,361
  Active employee benefit liabilities       2,460        2,566
  Environmental costs                         114        1,199
  Allowances on receivables                   979          954
  Net operating loss and alternative
    minimum tax carryovers                 29,981       21,832
  Other                                       985        1,858
    Total deferred tax assets              79,710       78,596
    Net deferred tax assets              $ 45,400    $  47,557


     For tax purposes, the Company had available as of December 31, 1997, net
operating loss ("NOL") carryforwards for regular federal income tax purposes of
approximately $68,100,000.  These NOL carryforwards expire as follows:

               2008      $ 7,600,000
               2009          900,000
               2010       14,900,000
               2011       27,200,000
               2012       17,500,000

     Additionally, in conjunction with the Alternative Minimum Tax Rules
("AMT"), the Company had available AMT credit carryforwards of approximately
$2,500,000, which may be used indefinitely to reduce regular federal income
taxes.

     Management believes that it is more likely than not that all of the NOL
carryforwards will be utilized prior to their expiration.  The NOL
carryforwards, as well as the existing deductible temporary differences, with
the exception of differences relating to the minimum pension liability
adjustment and the postretirement medical benefits, are largely offset by the
existing taxable temporary differences relating to accelerated depreciation
which will reverse within the carryforward period.



                     - 39 -



Furthermore, any recorded deferred tax assets associated with these future tax
benefits which would not be offset by the reversal of the accelerated
depreciation are expected to be realized by the achievement of future
profitable operations.  The Company experienced profitable operations in 1993,
1994 and 1995, exclusive of nonrecurring/unusual charges in connection with
restructuring and modifying the operations of the Company.  While the Company
experienced significant operating losses in 1996, management believes 1997
would have been a profitable year were it not for the unanticipated losses
associated with the union contract negotiations, the related decrease in
productivity in the periods surrounding the termination of the contract and the
year-end inventory write-offs.  Additionally, management currently expects
operations in 1998 to return to profitability.

     The Company operates in a highly cyclical industry and consequently has
had a history of generating operating profits over an average business cycle
despite periods of operating losses within a cycle.  Consequently, the
Company has had a history of generating NOL carryforwards and then utilizing
such NOL carryforwards to reduce regular income taxes in future periods.
During the period 1981 to 1984 the Company utilized $2,700,000 of NOL
carryforwards to reduce federal income taxes.  Management believes that no
valuation allowance is necessary for these deferred tax assets at this time.

     The Company has recorded deferred tax benefits associated with
postretirement obligations and additional minimum pension liabilities of
approximately $45,000,000 as of December 31, 1997.  The Company should have
deductible differences for tax purposes which greatly exceed the corresponding
deductions for financial reporting purposes in future years.  These
liabilities, which are based on actuarial calculations, are expected to be paid
and deductible over the remaining lives of current and retired employees.  Any
tax losses in future years associated with these deductible payments will be
subject to the 15-year NOL carryforward period provided under current tax
law.  Because of the extremely long period of time that is available to realize
these future tax benefits, a valuation allowance for these deferred tax assets
is not deemed necessary.

     In making these determinations regarding the ultimate realization of the
deferred tax assets, the Company is governed by the provisions of FAS 109,
which requires that when management is relying on future taxable income
to support the position that no valuation allowance is necessary, projections
of future operations must be substantially based on historical operating
results, as adjusted for unusual/nonrecurring items.  Management believes the
Company-wide cost reductions and productivity improvements implemented in the
last two years will return the Company to profitability in 1998.  However, if
operating losses


                     - 40 -



should occur in fiscal 1998, it would represent the fourth successive loss year
on an unadjusted basis, and under the provisions of FAS 109, a valuation
allowance would likely be required and such valuation allowance would
possibly be required on the entire deferred tax asset of $45,400,000.  A
valuation allowance of this magnitude would eliminate the Company's net worth
and under the current Bank Loan and Security Agreement, result in a violation
of the Company's net worth covenant in such agreement.

     The applicable statutory federal income tax rate of 34% for each of the
three years is reconciled to the effective income tax rate as follows
(thousands of dollars):

                                   1997       1996        1995
Federal income tax credit
computed at statutory tax rate   $ (1,651)   $(5,503)   $(5,604)
Non-taxable gain on sale of
subsidiary stock                       --       --         (277)
State income taxes, net              (399)      (819)      (542)
Other                                 107         68         99
Credit for income taxes          $ (1,943)   $(6,254)   $(6,324)

     Under Section 382 of the Internal Revenue Code of 1986, as amended, if the
percentage of stock (by value) of a corporation (the "Loss Corporation") that
is owned by one or more "five-percent shareholders" has increased by more than
50 percentage points over the lowest percentage of stock owned by the same
shareholders during a three year testing period (an "Ownership Change"), the
use of pre-ownership change net operating losses of the Loss Corporation
following such Ownership Change will be limited based on the value of the Loss
Corporation immediately before the Ownership Change occurs (a "Section 382
Limitation").  As of December 31, 1997, the Company had a deferred tax asset of
approximately $30,000,000 related to net operating loss and alternative minimum
tax carryovers.  Although the Company believes that the transactions
consummated pursuant to the Purchase Agreement between Ivaco and Birmingham
Steel on September 26, 1997 should not result in an Ownership Change, future
transactions involving persons who are not or who during the ensuing thirty-six
month period become "five-percent shareholders" as defined in Section 382
may trigger an Ownership Change.  If such an Ownership Change occurs, the
Company's use of its existing net operating loss carryovers at such time will
be subject to a Section 382 Limitation based on the value of the Company on
the date of such an Ownership Change.  Depending on the size of such net
operating loss carryovers at such time the limitation could have a material
adverse effect on the Company's financial statements.






                     - 41 -


Note 4
Debt:

     Long-term debt consists of the following at December 31 (thousands of
dollars):
                                               1997         1996

Bank Loan and Security Agreement:
   Revolving Loan                            $76,516    $ 76,126
   Term Loan                                   8,582       6,777

Note Payable Due December 31, 2001             2,000       2,000

Solid Waste Disposal Revenue Bonds:

  8.375% Bonds due from 1996 to 2008           6,275       6,615

  8.5% Bonds due from 2015 to 2020             9,430       9,430

8% Pollution Control Revenue Bonds due
  October 1, 2001 (annual sinking fund
  payments began in 1993)                      8,040       8,700

8% Industrial Development Revenue Bonds
  due October 1, 2001 (annual sinking fund
  payments began in 1992)                        670         725


                                             111,513     110,373

Less amounts payable within one year           2,356       2,484
                                            $109,157    $107,889


     The Company has a Loan and Security Agreement with three banks, expiring
in September 2002, which has been amended and restated to provide a total
credit facility of up to $100,000,000.  At December 31, 1997 the Term Loan
balance was $8,582,000 and the Revolving Loan maximum commitment was
$91,418,000 depending on borrowing base availability.  The December 31, 1997
amount available of $5,200,000 under the revolving credit facility was utilized
early in the first quarter of 1998 to cover outstanding short-term commitments,
primarily trade accounts payable.  Interest on the Revolving Loan is payable
at either prime plus 1-1/2% or a Eurodollar rate, at the Company's option.
Interest on the Term Loan is payable at either prime plus 2% or a Eurodollar
rate, also at the Company's option.  At December 31, 1997, the interest rates
ranged from 9.2% to 10.5%.  Interest on the $2,000,000 note payable is at prime
plus 1% and was 9.5% at December 31, 1997.





                     - 42 -



     Under terms of the Loan and Security Agreement the Company granted
security interests in accounts receivable and inventory to the participating
banks to support the Revolving Loan.  The Term Loan is secured by certain Plant
and Equipment.

     The Company has periodically amended its Loan and Security Agreement to
modify financial covenants relating to operating results and net worth.  The
most recent amendment was effective March 27, 1998 when covenant violations
relating to 1997 were waived, and provisions relating to periods subsequent to
1997 were amended, as shown below.

     Based on management's projections of future operations, management
believes it will be able to maintain compliance with the financial covenants
and ratios throughout 1998.  The Company has received several waivers and
amendments from its banks in the past and while management believes it will be
able to receive waivers or amendments in the future, should the need arise,
there are no assurances that such waivers or amendments will be forthcoming.

     The most restrictive provisions of the Company's loan agreements, as
amended, include the following:

A.   The Company shall maintain specified consolidated adjusted net worth
     levels as follows:

          March 31, 1998      $26,000,000
          June 30, 1998        26,000,000
          September 30, 1998   29,000,000
          December 31, 1998    31,600,000

          Thereafter, as defined in the Loan and Security Agreement.

     As of December 31, 1997 consolidated adjusted net worth, as defined in the
     Loan and Security Agreement, was $28,205,000.

B.   The Company will also maintain a Consolidated Fixed Charge Coverage Ratio,
     as defined, determined as of the end of each quarter.

C.   Payment of cash dividends on common stock is limited to 50% of cumulative
     net earnings after March 31, 1994.  As of December 31, 1997 no funds are
     available for dividends on common stock and such funds are not likely to
     be available in the foreseeable future.

     The Company is also required to comply with various covenants relating to
limits on liabilities as defined in the Pollution Control Revenue Bonds.  At
December 31, 1997, the Company was in compliance with these covenants.  As part
of the modifications to the Restated Loan and Security Agreement


                     - 43 -



previously mentioned, in 1997 the Company received the approval of parties to
the Solid Waste Revenue Bonds to eliminate certain negative financial covenants
contained therein and to substitute therefore certain collateral.  Subsequent
to that substitution, the only remaining negative financial covenant with
respect to the Solid Waste Revenue Bonds is that the Company may not without
the prior written consent of the Issuer of the Bonds (I) borrow from its
subsidiary, Laclede Chain Manufacturing Company, or (ii) take cash advances
from Laclede Chain Manufacturing Company, except to the extent that the
aggregate principal amount of all such borrowings and cash advances at any one
time do not exceed $7,000,000.  Collateral granted to the Trustee of the Solid
Waste Revenue Bonds for the benefit of the bondholders consists of (i) all of
the issued and outstanding shares of Laclede Chain Manufacturing Company and
(ii) all of Laclede Chain Manufacturing Company's machinery and equipment now
owned or thereafter acquired.  As of December 31, 1997, the Company is in
compliance with the remaining negative covenant contained in the Solid Waste
Revenue Bonds.

     The Company has no compensating balance arrangements.  Excluding the
Revolving Loan, aggregate maturities of long-term borrowings at December 31,
1997 for the next five years are as follows:

               1998            $ 2,356,000
               1999              2,411,000
               2000              2,461,000
               2001             10,241,000
               2002              4,008,000

     The Company estimates that the fair value of its long-term debt in the
aggregate approximates the carrying value at December 31, 1997 and 1996.

     The Company is party to a Paying Agent Agreement in which the Paying Agent
assists the Company in purchasing certain raw material.  The terms of this
agreement require the Company to pay a commission of 1.5% on all purchases
plus a fee on the invoice amount.  Amounts purchased under this agreement are
included in accounts payable and amounted to $5,984,000 and $3,270,000 as of
December 31, 1997 and 1996, respectively.

Note 5
Employee Benefits:
Defined Benefit Pension Plan -

     The Company has several non-contributory defined benefit pension plans
providing retirement benefits for substantially all employees.  Benefits under
the plans are primarily based on years of service and employee's compensation
prior to retirement.



                     - 44 -




Annual pension plan funding is based on the range of deductible contributions
permitted by ERISA regulations, taking into account the Company's current income
tax situation.

     The components of pension cost are as follows (thousands of dollars):

                                     1997      1996       1995

Service cost                      $  1,742   $ 2,111   $  1,538
Interest cost on projected
  benefit obligation                13,710    13,868     14,767
Actual return on plan assets       (25,675)  (19,996)   (22,502)
Net amortization and deferral       19,917    13,596     14,921

Net periodic pension cost            9,694     9,579      8,724
Curtailment loss recognized             --     1,559      2,966

Total pension cost                $  9,694   $11,138   $ 11,690

     In the fourth quarter of 1996 the Company presented an early retirement
incentive offer to certain hourly employees at the Alton Plant.
Approximately 90 employees elected to accept the offer and retired during the
quarter.  In accordance with applicable accounting standards, the Company
recorded a non-cash charge of $1,559,000 representing a pension curtailment
loss and the cost of special termination benefits.

     In the fourth quarter of 1995 the Company recorded a special restructuring
charge which included a $2,966,000 curtailment loss related to planned work
force reductions.  See Note 6 to the Consolidated Financial Statements for
additional discussion.

     The projected benefit obligations at December 31, 1997 and 1996 were
determined using assumed discount rates of 7.25% and 6.75%, respectively.  The
assumed discount rate is based on market conditions and reflects annuity
purchase rates available to theoretically settle plan obligations.  For all
plans other than the Alton Plant Hourly Employees' Plan, the average assumed
rate of increase in compensation levels was 2% for all years.  Reflecting the
Labor Agreement for Alton hourly employees, a 1% rate of increase in
compensation was assumed for all years.  The weighted average assumed long-term
rate of return on the market-related value of plan assets was 9.9% for 1997,
9.8% for 1996 and 9.9% for 1995.









                     - 45 -
A summary of the funded status of the plans is as follows (thousands of
dollars):
<TABLE>
<CAPTION>
                            December 31
                            1997                                   1996
                            Assets ExceedAccumulated              Assets Exceed Accumulated
                            Accumulated  Benefits                 Accumulated   Benefits
                            Benefits     Exceed Assets  Total     Benefits      Exceed Assets  Total
<S>                         <C>          <C>          <C>          <C>          <C>          <C>
    Actuarial present value
    of accumulated benefit
    obligation:
       Vested               $  (7,384)   $(179,470)   $(186,854)   $  (6,658)   $(182,949)   $(189,607)
       Non-Vested                (348)      (8,256)      (8,604)        (367)      (5,013)      (5,380)
    Total                   $  (7,732)   $(187,726)   $(195,458)   $  (7,025)   $(187,962)   $(194,987)


    Projected benefit
    obligation              $ (11,176)   $(189,584)   $(200,760)   $  (9,386)   $(190,657)   $(200,043)

    Plan assets at fair        11,374      137,332      148,706        9,320      121,013      130,333
    value
    Projected benefit
    obligation(in excess of)
    less than plan assets         198      (52,252)     (52,054)         (66)     (69,644)     (69,710)

    Unrecognized net
    obligation at transition
    date, January 1, 1987         251        6,078        6,329          315        7,599        7,914

    Unrecognized losses,
    net                         4,803       40,598       45,401        5,426       53,362       58,788

    Unrecognized prior
    service cost                  189        7,655        7,844         (168)       5,720        5,552

    Adjustment required to
    recognize minimum
    liability                      --      (52,520)     (52,520)          --      (64,008)     (64,008)

    Net pension cost
    recorded on balance
    sheet                   $   5,441    $ (50,441)   $ (45,000)   $   5,507    $ (66,971)   $ (61,464)


 </TABLE>

        - 46 -




     In accordance with FASB Statement No. 87, the Company has recorded an
additional minimum pension liability for underfunded plans of $52,520,000 at
December 31, 1997 and $64,008,000 at December 31, 1996, representing the excess
of unfunded accumulated benefit obligations over previously recorded pension
cost liabilities.  A corresponding amount is recognized as an intangible asset
except to the extent that these additional liabilities exceed related
unrecognized prior service cost and net transition obligation, in which case
the increase in liabilities is charged directly to stockholders' equity.  The
principal cause of the reduction in underfunded pension liability is actual
return on plan assets in excess of the assumed rate of return in 1997.  As of
December 31, 1997, the excess minimum liability was $37,869,000 and the
after-tax charge to equity was $23,479,000.  As of December 31, 1996,
$49,543,000 of the excess minimum pension liability resulted in a charge to
equity, net of income taxes, of $30,717,000.

Profit Sharing Plan -

     The Company maintains a defined contribution profit sharing thrift plan
covering a majority of its salaried employees.  In 1996 the Plan was amended to
provide for a minimum Company contribution regardless of the level of Company
profitability.  Company contributions for 1997 amounted to $259,000 and for
1996 amounted to $272,000.  There was no profit sharing contribution for 1995.

Postretirement Medical Benefit Plans -

     In addition to providing pension benefits, the Company provides certain
health care and life insurance benefits for active and retired employees.  A
significant portion of the Company's employees may become eligible for the
retiree benefits if they reach retirement age while working for the Company.

     The components of net periodic postretirement medical benefit costs are as
follows (thousands of dollars):
                                     1997      1996       1995

Service cost                       $   452    $  698    $   638
Interest cost                        3,731     4,522      5,708
Amortization of unrecognized
  prior service credits               (960)       --         --
Amortization of unrecognized
 net gain                           (1,420)   (1,265)      (215)
Net periodic cost                    1,803     3,955      6,131
Curtailment loss recognized             --        --      1,089
Total cost                         $ 1,803    $3,955    $ 7,220






                     - 47 -



     The reduction in cost in 1996 was due to favorable claims experience in
prior years.  The 1997 cost reduction resulted from both plan and assumption
changes.  The actual postretirement medical benefits paid amounted to
$5,721,000 in 1997, $5,603,000 in 1996 and $4,969,000 in 1995.  See Note 6 for
discussion of curtailment loss.

     A summary of the status of the plans is as follows (thousands of dollars):

                                    December 31,     December 31,
                                        1997            1996

Accumulated postretirement
 benefit obligation (APBO):
   Retirees                          $ (43,249)      $ (37,100)
   Fully eligible active
    employees                           (5,131)         (9,044)
   Other active employees               (7,370)         (7,692)
Total                                  (55,750)        (53,836)

Fair value of plan assets                   --              --

Funded status                          (55,750)        (53,836)

Unrecognized prior service credits      (7,845)         (8,805)
Unrecognized net gain                  (12,269)        (17,141)
Accrued postretirement
 benefit cost                        $ (75,864)      $ (79,782)

     The increase in APBO as of December 31, 1997 relates to recent unfavorable
claims experience.

     The assumed discount rate used to measure the APBO was 7.25% at December
31, 1997 and 1996.  The assumed future health care cost trend rate for the
December 31, 1997 and 1996 calculations is 7.9%, gradually declining to 3.25%.
A one percentage point increase in the assumed health care cost trend rates for
each future year would have increased the aggregate of the service and interest
cost components of the net periodic postretirement benefit cost by $477,000 for
1997, $480,000 for 1996 and $603,000 for 1995, and would have increased the
APBO by $5,455,000 as of December 31, 1997 and $4,302,000 as of December 31,
1996.

Note 6
Restructuring, Asset Impairment and Other Charges:

     In the fourth quarter of 1996 the company presented an early retirement
incentive offer to certain hourly employees at the Alton Plant.
Approximately 90 employees elected to accept the offer and retired during the
quarter.  In accordance with




                      - 48-




applicable accounting standards, the Company recorded a non-cash charge of
$1,559,000 ($951,000 after taxes), representing a pension curtailment loss and
the cost of special termination benefits.

     In December 1995, the Company recorded a non-cash charge of $18,422,000
($11,422,000 after taxes), relating to the restructuring of its operations,
asset impairments and inventory write-offs.  This charge was primarily the
result of a decision to initiate the final phase of the Company's strategic
plan, leading to a restructuring of the steelmaking facilities at the Alton
Plant.

     The new Ladle Furnace Facility became operational in the second quarter of
1996 and all steel is now produced using the more efficient continuous cast
method.  The Company also ceased production of rods, and began purchasing
requirements for its wire operations on the open market, at a significant
reduction in costs.  In connection with this restructuring, the Company also
shut down its Blooming Mill and Rod Mill operations.

     As a result of this decision, non-cash accounting charges totaling
$15,780,000 were recorded, which are included in the $18,422,000 charge
mentioned above.  These charges include $6,190,000 for recognition of impairment
loss for equipment and $4,565,000 for employee termination benefits and pension
and postretirement benefit curtailment losses.  In addition inventories relating
to these operations have been written down by $5,025,000 to reduce their
carrying cost to their net realizable value.

     The Company also recognized a charge of $2,642,000 related to inventory
write-downs in its tubular product operations, which are also part of the
$18,422,000 charge.  This inventory adjustment, which reduces the carrying cost
to net realizable value, reflects higher second half production costs together
with significant reductions in selling prices for tubular
products during 1995.

Note 7
Interest Expense, Net:

     Interest expense capitalized in 1996 and 1995 was $323,000 and $484,000,
respectively.  No interest was capitalized in 1997.










                     - 49 -
<PAGE>
    Note 8
    Quarterly Results of Operations (Unaudited):

    The results of operations by quarter for 1997 and 1996 were as follows (in
thousands of dollars except per share data):

    <TABLE>
    <CAPTION>
                         QUARTER ENDED
                         1997                                            1996
                          Mar. 31    Jun. 30    Sep. 30    Dec. 31        Mar. 31    Jun. 30    Sep. 30    Dec. 31
    <S>                  <C>        <C>        <C>        <C>            <C>        <C>        <C>        <C>
    Net sales            $80,846    $78,722    $85,788    $79,673        $80,975    $86,436    $83,630    $84,340

    Cost of products sold 73,870     71,180     77,163     77,357         76,058     83,245     80,836     76,815

    Net sales less cost
    of products sold     $ 6,976    $ 7,542    $ 8,625    $ 2,316        $ 4,917    $ 3,191    $ 2,794    $ 7,525

    Net earnings (loss)  $   135    $     9    $   521    $(3,672)       $(2,031)   $(3,045)   $(3,390)   $(1,519)

    Basic and
    fully diluted
    net earnings (loss)
    per share            $  0.01    $ (0.02)   $  0.11    $ (0.93)       $ (0.50)   $ (0.75)   $ (0.84)   $ (0.41)
</TABLE>

Note 9
Commitments And Contingencies:

     The Company has non-cancelable operating leases for office space and
certain equipment through 2007.  Future minimum lease commitments required under
these leases are as follows:

                   1998                          $4,890,000
                   1999                          4,635,000
                   2000                          4,412,000
                   2001                          3,037,000
                   2002                          1,577,000
                   Thereafter                      3,020,000
                   TOTAL                         $21,571,000

     Rent expense under all leases in 1997, 1996 and 1995 was $4,254,000,
$3,528,000 and $2,777,000, respectively.

     In 1996 the Company entered into a sale and leaseback transaction with a
third party for the Ladle Metallurgy Facility at Alton.  The third party agreed
to purchase the equipment in 1996 for approximately $4,000,000 cash and a note
receivable for approximately $3,600,000 which was paid in January 1998 to
complete the lease transaction.  The lease term is for five years starting
August 1, 1996 and continuing until June 30, 2001 with an option to purchase the
equipment at the expiration date.





                     - 50 -



     There are various claims pending involving the Company and its subsidiaries
with respect to environmental, hazardous substance and other matters arising out
of the routine conduct of the business.  Such claims either have not been
reduced to litigation or, if suit has been filed, are in the discovery stage.
Therefore the total liability on pending claims at December 31, 1997, if any,
cannot be determined.

     The Company believes it has meritorious defenses with respect to all claims
and litigation and the ultimate disposition of such matters will not materially
affect its financial position or results of operations.

     In connection with its Melt Shop operations the Company generates electric
furnace dust, which the Environmental Protection Agency (EPA) has designated as
a hazardous waste.  The Company developed a modified closure plan which was
approved by the Illinois EPA.  This plan provided for the closure of existing
electric furnace dust piles in place, and the project was completed in
1997.  Because the project was completed at less than the cost reserve
previously established, a credit for $994,000 was recorded in the fourth quarter
of 1997.

Idled Property

     In December 1997, the Company idled its High Temperature Metal Recovery
facility ("HTMR") after the facility became inoperable due to an accident.  This
facility was used to  dispose of the Company's EAF dust generated in the Alton
Facility.  During 1998, management plans to dispose of the EAF dust through
alternative methods.  Management plans to evaluate the HTMR facility
periodically to determine the economic feasibility of repairing and operating
the unit.  If it is determined that the HTMR unit cannot function on an
economically feasible basis in the future, it is unlikely that the asset would
support its current carrying value which was approximately $15,300,000 as of
December 31, 1997, and a corresponding impairment write-down may be necessary.

Retirements

     Executive retirements, including CEO John B. McKinney, in the first half of
1998 will result in non-cash charges of approximately $3,000,000 ($1,800,000
after recognition of tax benefits).

Note 10
Preferred Stock:

     In July 1996 the Company issued 416,667 shares of Series A 6% preferred
stock to Ivaco Inc. and the executive officers of the Company for $6,090,000,
after expenses.  This transaction resulted in an increase in capital
in excess of par value of

                     - 51 -



$6,006,667.  On October 28, 1996, at a special meeting of the stockholders, an
amendment was approved to the Company's Certificate of Incorporation which
reduced the par value of each share of common stock from $13.33 per share to
$.01 per share and increased the number of authorized common stock shares from
5,000,000 shares to 25,000,000 shares.  The stockholders also approved the
recapitalization of the Company's Series A 6% preferred stock.  At such time
each share of the preferred stock became convertible into common stock at the
option of the holder at a conversion price of $3.20 into 4.69 shares of common
stock.  In the event of voluntary or involuntary liquidation of the Company, the
holders of shares of Series A Preferred Stock are entitled to receive
liquidating distributions in the amount of $15.00 per share plus accrued and
unpaid dividends before payment is made to holders of common stock.

Note 11
Benwood Sale:

     In February 1997, the Company sold the assets of its electric weld
structural and mechanical tubing operation, located in Benwood, West Virginia.
Cash proceeds from the sale of these assets, which consist primarily of
equipment and inventory, totaled approximately $11,000,000.  The Company used
the funds from the sale to improve its working capital position.  Sale of these
assets will not affect the Company's primary tubular business, continuous weld
pipe.

Note 12
Related-Party Transactions:

     The Company has transactions in the normal course of business with Ivaco
Inc. or affiliated companies.  As of December 31, 1997 Ivaco Inc. owned 24.88%
of the Company's outstanding common stock.  In 1997 the Company purchased rods
at market prices totaling $5,502,000 from affiliates of Ivaco.

     Prior to 1998, the Company participated in an insurance purchasing
arrangement with Ivaco.  Under the terms of this arrangement Ivaco purchased
insurance on behalf of the Company and billed the Company for this insurance.
Amounts paid by the Company for this insurance amounted to $1,156,000,
$1,521,000 and $1,341,000 for the years ended December 31, 1997, 1996 and 1995,
respectively.

     The Company also has transactions in the normal course of business with
Birmingham Steel or affiliated companies.  As of December 31, 1997 Birmingham
Steel beneficially owned 50.26% of the Company's outstanding common stock which
includes the voting rights on the Ivaco investment discussed above.  In 1997 the
Company purchased rods and participated in rod conversion arrangements with
affiliates of Birmingham Steel at market prices, which totaled $3,508,000.  Also
in 1997, an affiliate of Birmingham Steel purchased semi-finished steel from the
Company at market prices totaling $643,000.


                     - 52 -




INDEPENDENT AUDITORS' REPORT


To The Board Of Directors
And Stockholders Of
Laclede Steel Company:

     We have audited the accompanying consolidated balance sheets of Laclede
Steel Company and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1997.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on the financial statements based on our
audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Laclede Steel Company and
subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.




Deloitte & Touche LLP
March 27, 1998
St. Louis, Missouri













                     - 53 -


                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.

  March 30, 1998                      /s/ Thomas E. Brew, Jr.
     Date                     Thomas E. Brew, Jr.
                                             President
                                     Principal Executive Officer

  March 30, 1998                       /s/ Michael H. Lane
     Date                          Michael H. Lane
                                       Vice President-Finance
                                      Treasurer and Secretary
                                     (Principal Financial and
                                        Accounting Officer)
                                             Director

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



   March 30, 1998             /s/ Wayne P. E. Mang
     Date                          Wayne P. E. Mang
                                       Chairman of the Board

  March 30, 1998                       /s/ Joseph Alvarado
     Date                Joseph Alvarado
                                              Director

  March 30, 1998                       /s/ Robert A. Garvey
     Date                          Robert A. Garvey
                                              Director

  March 30, 1998                       /s/ William R. Lucas, Jr.
     Date                          William R. Lucas, Jr.
                                              Director

  March 28, 1998                       /s/ Philip R. Morgan
     Date                          Philip R. Morgan
                                              Director

  March 30, 1998                       /s/ Robert H. Quenon
     Date                          Robert H. Quenon
                                              Director

  March 23, 1998                       /s/ George H. Walker III
     Date                          George H. Walker III
                                               Director