OREGON STEEL MILLS, INC.
                           DIRECTORS' RETIREMENT PLAN
                            EFFECTIVE JANUARY 1, 1998

         SECTION 1.  INTRODUCTION

         The Oregon Steel Mills, Inc. Directors' Retirement Plan (the "Plan")
was established effective January 1, 1998 to provide retirement benefits to
Eligible  Directors.  The Plan may be amended or terminated at any time, as 
provided in Section 8.  Capitalized terms used in the Plan are defined in
Section 9.

         SECTION 2.  ELIGIBILITY AND PARTICIPATION

         Participation in the Plan shall be limited to Eligible Directors. An
Eligible Director shall become a Participant and shall be eligible to receive a
retirement benefit under the Plan upon completing five Years of Service as an
Eligible Director.

         SECTION 3.  RETIREMENT BENEFITS

         (a) Amount of Annual Benefit.  A Participant's retirement benefit
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under the Plan shall be $20,000 per year payable in cash in accordance with
Section 3(b).

         (b) Payment and Duration of Benefit. A Participant's retirement benefit
             -------------------------------
shall become payable only after the Participant's retirement from all service
with the Company and its subsidiaries, whether as a Director or as an employee.
The first payment to the Participant shall be made on or about the first
business day in January following the Participant's retirement from the Company
or its subsidiaries. Annual payments shall continue to be made on or about the
first business day in each succeeding January until the number of payments to
the Participant equals the number of full Years of Service that the Participant
served as an Eligible Director. Notwithstanding the foregoing, (i) the Committee
(in its sole discretion) may at anytime direct that the present value of any
retirement benefits determined under this Section 3 shall be paid to the
Participant in a lump sum; and (ii) in the event that a Participant's service
terminates within three years following a Change in Control, the present value
of the Participant's retirement benefits under this Section 3 shall be paid to
the Participant in a lump sum as soon as practicable following such termination.
For purposes of the preceding sentence, present value shall be calculated using
the interest rate assumption then in effect for determining lump sum payments
under the Pension Plan. The payment of a lump sum pursuant to (i) or (ii) above
shall discharge the Company from any further obligation to pay retirement
benefits with respect to the Participant under the Plan.

         (c) Suspension of Benefit. Payment of retirement benefits hereunder
             ---------------------
shall be suspended during any period in which a Participant returns to service
as a Director or employee of the Company or any of its subsidiaries. Payments
shall recommence after the 


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Participant's service terminates, at which time the retirement benefit shall be
recalculated to reflect any additional Years of Service.

         SECTION 4.  BENEFITS UPON DEATH OF PARTICIPANT.

         Upon the death of a Participant, the present value of any unpaid
benefits under the Plan shall be paid in a lump sum to the beneficiary
designated by the Participant. Such present value shall be calculated using the
interest rate assumption then in effect for determining lump sum payments under
the Pension Plan. If the Participant had not designated a beneficiary or if the
designated beneficiary did not survive the Participant, the lump sum benefit
shall be paid to the Participant's estate. Any payment under this Section 4
shall be made as soon as practicable after the Participant's death.

         SECTION 5.  FUNDING.

         The Plan shall be unfunded and shall represent an unsecured obligation
of the Company. Benefits hereunder shall be paid only from the general assets of
the Company, and the Participants and their beneficiaries shall have no rights
to any segregated funds or property of the Company.

         SECTION 6.  NO ASSIGNMENT.

         Except as provided in Section 4, the right of any person to any payment
under the Plan shall not be assignable or transferable except by will or the
laws of descent and distribution, and any act in violation of this Section 6
shall be void.

         SECTION 7.  ADMINISTRATION OF THE PLAN.

         The Plan shall be administered by the Committee. The Committee shall
have sole discretion to interpret the terms of the Plan, to determine
eligibility under the Plan and to take any and all actions to administer the
Plan as the Committee deems appropriate. The Committee's interpretations,
determinations and actions under the Plan shall be conclusive and binding on all
persons.

         SECTION 8.  AMENDMENT AND TERMINATION.

         The Committee shall have the authority to amend or terminate the Plan
at any time. In the event of an amendment or termination of the Plan, a
Participant's benefit hereunder shall not be less than the benefit to which the
Participant would have been entitled if his or her service as an Eligible
Director had terminated immediately prior to such amendment or termination.
Except as otherwise determined by the Committee, such benefit shall become
payable only after the Participant's service with the Company and its
subsidiaries terminates, as provided in Section 3(b).

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         SECTION 9.  DEFINITIONS.

         (a) "Change in Control" of the Company shall be deemed to have occurred
             -------------------
             if:

                  (i) At any time less than a majority of the Directors of the
Company are individuals who were either elected by the Board of Directors or
nominated by the Board of Directors (or a committee of the Board of Directors)
for election by the stockholders of the Company;

                  (ii) At any time a majority of the Board of Directors of the
Company are individuals who, in connection with a single transaction or a series
of related transactions that effects a change in the ownership of the Company,
were either elected by the Board of Directors or nominated by the Board of
Directors (or a committee of the Board of Directors) for election by the
stockholders of the Company;

                  (iii) Any person (other than (a) an employee benefit plan of
the Company, or (b) a corporation owned directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company) is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing twenty-five percent
(25%) or more of the combined voting power of the Company's then outstanding
securities; or

                  (iv) The stockholders of the Company approve a plan of
complete liquidation of the Company, other than in connection with the complete
cessation of the business activities conducted with the Company's operating
assets, or (b) an agreement is entered for the sale or disposition by the
Company of all or substantially all of the Company's assets except pursuant to
an order of a bankruptcy court having jurisdiction of the Company. For purposes
of clause (b), the term "the sale or disposition by the Company of all or
substantially all of the Company's assets" shall mean a sale or other
disposition transaction or series of related transactions involving assets of
the Company or of any direct or indirect subsidiary of the Company (including
the stock of any direct or indirect subsidiary of the Company) in which the
value of the assets or stock being sold or otherwise disposed of (as measured by
the purchase price being paid therefore or by such other method as the Board of
Directors determines is appropriate in a case where there is no readily
ascertainable purchase price) constitutes more than two-thirds (2/3) of the fair
market value of the Company (as hereinafter defined). For purposes of the
preceding sentence, the "fair market value of the Company" shall be the
aggregate market value of the Company's outstanding common (on a fully diluted
basis) plus the aggregate market value of the Company's other outstanding equity
securities, if any. The aggregate market value of the Company's common stock
shall be determined by multiplying the number of shares of Company's common
stock (on a fully diluted basis) outstanding on the date of the execution and
delivery of a definitive agreement with respect to the transaction or series of
related transactions (the "Transaction Date") by the average closing price of
the Company's common stock for the ten (10) trading days immediately preceding
the Transaction Date. The aggregate market value of any other equity securities
of

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the Company shall be determined in a manner similar to that prescribed in the
immediately preceding sentence for determining the aggregate market value of the
Company's common stock or by such other method as the Board of Directors shall
determine is appropriate; provided that, in the event that on the Transaction
Date there is no public market for such common stock or other equity security,
the fair market value of the equity securities or common stock shall be as
reasonably determined by the Board of Directors.

         (b) "Beneficial Ownership" shall have the meaning as is set forth in
             ----------------------
Rule 13d of the Securities Exchange Act of 1934, as amended.

         (c) "Committee" means the Compensation Committee of the Board of
             -----------
Directors of the Company.

         (d) "Company" means Oregon Steel Mills, Inc., a Delaware corporation.
             ---------

         (e) "Director" means a director of the Company.
             ----------

         (f) "Eligible Director" means a Director of the Company who is not an
             -------------------
employee of the Company or any of its subsidiaries. A Director who is an
employee may become an Eligible Director upon termination of employment with the
Company; however, such Director's Years of Service under this Plan shall not
include those years served as both a Director and an employee.

         (g)  "Participant"  means an  individual  who has met the  requirements
              -------------
of Section 2 and who is  receiving  or is eligible to receive a benefit under
Section 3.

         (h) "Plan" means the Oregon Steel Mills, Inc. Directors' Retirement
             ------
Plan, as set forth herein and as amended from time to time.

         (i) "Pension Plan" means the Oregon Steel Mills, Inc. Salaried
             --------------
Employees' Pension Plan, as amended from time to time.

         (j) "Years of Service" means completed 12-month periods of service as
             ------------------
an Eligible Director, as determined by the Committee. All such periods of
service shall be aggregated, whether or not continuous. The Committee's
determination of an individual's Years of Service shall be conclusive and
binding on all persons.

         SECTION 10.  REPLACEMENT PLAN.

         For Eligible Directors, this Plan supersedes and replaces the deferred
compensation plan for Company directors adopted in (1986).

   
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         SECTION 11.  EXECUTION.

         To record the adoption of the Plan, the Company has caused its
authorized officer to execute the same this 9th day of February, 1998.
                                            ---        --------


OREGON STEEL MILLS, INC.



   /s/ Thomas B. Boklund
---------------------------------------
By:    Thomas B. Boklund
   ------------------------------------
Its:  Chairman, Chief Executive Officer
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