<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               -------------------

                                    FORM 10-Q

                               -------------------

 [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934.

      For the quarterly period ended September 30, 2001

                                       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 333-79587


                        CALIFORNIA STEEL INDUSTRIES, INC.

             (Exact Name of Registrant as Specified in Its Charter)

                 Delaware                            33-0051150
     (State or Other Jurisdiction of      (I.R.S. Employer Identification No.)
      Incorporation or Organization)

             14000 San Bernardino Avenue
                 Fontana, California                             92335
(Address of principal executive offices of Registrant)         (Zip Code)

                                 (909) 350-6200
               (Registrant's telephone number including area code)

                            ------------------------

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 (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.         [X]  Yes      [_]   No

As of October 30, 2001, 1,000 shares of the Company's common stock, no par
value, were outstanding.

<PAGE>

                        CALIFORNIA STEEL INDUSTRIES, INC.

                                Table of Contents
                                -----------------

<TABLE>
<CAPTION>
                                                                                                     Page
<S>                                                                                                  <C>
PART I  FINANCIAL INFORMATION ......................................................................    1

     ITEM 1. FINANCIAL STATEMENTS ..................................................................    1

             Consolidated Balance Sheets as of September 30, 2001
             (unaudited) and December 31, 2000 .....................................................    1

             Consolidated Statements of Operations for the three and nine months ended
             September 30, 2001 and September 30, 2000 (unaudited) .................................    2

             Consolidated Statements of Cash Flows for the nine months ended
             September 30, 2001 and September 30, 2000 (unaudited) .................................    3

             Notes to Consolidated Financial Statements (unaudited) ................................    4

     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS ...................................................    6

     ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
             MARKET RISK ...........................................................................   10

PART II OTHER INFORMATION ..........................................................................   11

     ITEM 1. LEGAL PROCEEDINGS .....................................................................   11

     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ......................................................   12

SIGNATURE ..........................................................................................   13

INDEX TO EXHIBITS ..................................................................................   14
</TABLE>

<PAGE>

PART I   FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                        CALIFORNIA STEEL INDUSTRIES, INC.
                                 AND SUBSIDIARY
                           Consolidated Balance Sheets

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                        As of                As of
                                                                                    September 30,         December 31,
                                    Assets                                               2001                 2000
                                    ------                                         ---------------       --------------
                                                                                     (Unaudited)
<S>                                                                                <C>                   <C>
Current assets:
         Cash and cash equivalents.........................................           $    1,198           $    2,542
         Trade accounts receivable, less allowance for doubtful
             receivables of $600,000 at September 30, 2001 and
             December 31, 2000.............................................               67,143               59,998
         Inventories.......................................................              150,148              218,579
         Deferred income taxes.............................................                3,242                3,242
         Other receivables and prepaid expenses............................                5,717                9,079
                                                                                     -----------          -----------

                      Total current assets.................................              227,448              293,440
                                                                                     -----------          -----------

Investment in affiliated company...........................................               36,815               36,151
Other assets...............................................................                3,673                4,138
Property, plant and equipment, net.........................................              259,537              268,429
                                                                                     -----------          -----------

                      Total assets.........................................           $  527,473           $  602,158
                                                                                     ===========          ===========

                      Liabilities and Stockholders' Equity
                      ------------------------------------
Current liabilities:

         Accounts payable..................................................           $   41,198           $   65,508
         Accrued interest expense..........................................                  161                4,325
         Accrued utilities.................................................                3,645                7,233
         Other accrued expenses............................................                7,494                6,320
                                                                                     -----------          -----------

                      Total current liabilities............................               52,498               83,386
                                                                                     -----------          -----------

Long-term debt, excluding current installments.............................              202,000              239,000
Deferred income taxes......................................................               42,863               42,863

Stockholders' equity:

         Class C preferred stock, $10,000 par value per share.
             Authorized 3,000 shares; issued and outstanding
             3,000 shares..................................................               30,000               30,000
         Common stock, no par value.  Authorized 2,000 shares; issued
             and outstanding 1,000 shares..................................               10,000               10,000
         Retained earnings.................................................              190,112              196,909
                                                                                     -----------          -----------

                      Total stockholders' equity...........................              230,112              236,909

         Commitments and contingencies.....................................                   --                   --
                                                                                     -----------          -----------

                      Total liabilities and stockholders' equity...........           $  527,473           $  602,158
                                                                                     ===========          ===========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

                        CALIFORNIA STEEL INDUSTRIES, INC.
                                 AND SUBSIDIARY
                      Consolidated Statements of Operations

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                 Three months ended                 Nine months ended
                                                                    September 30,                      September 30,
                                                                    -------------                      -------------
                                                                                        (Unaudited)
                                                               2001                2000             2001             2000
                                                        ---------------------------------------------------------------------
<S>                                                     <C>                     <C>              <C>              <C>
Net sales.............................................      $168,291            $186,796         $489,119         $570,988
Cost of sales.........................................       164,537             170,810          469,018          477,586
                                                            --------            --------         --------         --------

       Gross profit...................................         3,754              15,986           20,101           93,402
Selling, general and administrative expenses..........         5,900               6,824           17,434           24,069
                                                            --------            --------         --------         --------

       Income (loss) from operations..................        (2,146)              9,162            2,667           69,333

Other income (expense):
   Equity in income (loss) of affiliate...............           (33)                937              907            1,547
   Interest expense, net..............................        (3,946)             (4,821)         (12,726)         (13,620)
   Other, net.........................................            25                 229            1,554              871
                                                            --------            --------         --------         --------

       Income (loss) before income tax expense
        (benefit).....................................        (6,100)              5,507           (7,598)          58,131
Income tax expense (benefit)..........................        (2,609)              2,091           (3,801)          23,561
                                                            ---------           --------         ---------        --------

       Net income (loss)..............................      $ (3,491)           $  3,416         $ (3,797)        $ 34,570
                                                            =========           ========         =========        ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                        2

<PAGE>

                        CALIFORNIA STEEL INDUSTRIES, INC.
                                 AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                                   Nine Months Ended
                                                                                                      September 30,
                                                                                         ----------------------------------------
                                                                                                2001                 2000
                                                                                         -------------------- -------------------
                                                                                                       (Unaudited)
<S>                                                                                      <C>                  <C>
Cash flows from operating activities:
         Net income (loss).............................................................    $      (3,797)       $      34,570
         Adjustments to reconcile net income (loss) to net cash provided by
             operating activities:
                  Depreciation and amortization........................................           22,649               21,228
               Gain (loss) on disposition and write-down of idle plant and
                  equipment............................................................               --                   (3)
               Undistributed earnings of affiliate.....................................             (907)              (1,547)
               Dividends received from affiliate.......................................              243                  762
               Change in assets and liabilities:
                  Trade accounts receivable, net.......................................           (7,145)              (5,530)
                  Inventories..........................................................           68,431              (24,021)
                  Other receivables and prepaid expenses...............................            3,362                1,088

                  Accounts payable.....................................................          (24,310)             (11,143)
                  Income taxes payable.................................................               --               (2,946)
                  Accrued interest expense.............................................           (4,164)               8,452
                  Other accrued expenses...............................................           (2,414)                (284)
                                                                                           -------------        -------------
                              Net cash provided by operating activities................           51,948               20,626
                                                                                           -------------        -------------
Cash flows from investing activities:
         Additions to property, plant and equipment....................................          (13,292)             (23,117)
         Proceeds from (expenses for) sale of property, plant and equipment............               --                   35
                                                                                           -------------      ---------------
                              Net cash used in investing activities....................          (13,292)             (23,082)
                                                                                           -------------      ---------------
Cash flows from financing activities:
         Net repayments under line-of-credit agreement with banks......................          (37,000)              12,000
         Dividends paid................................................................           (3,000)             (15,014)
                                                                                           -------------        -------------
               Net cash used in financing activities...................................          (40,000)              (3,014)
                                                                                           -------------        -------------
                               Net decrease in cash and cash equivalents...............           (1,344)              (5,470)
         Cash and cash equivalents at beginning of period..............................            2,542                7,899
                                                                                           -------------        -------------
         Cash and cash equivalents at end of period....................................    $       1,198        $       2,429
                                                                                           =============        =============

Supplemental disclosures of cash flow information:
         Cash paid during the period for:
               Interest (net of amount capitalized)....................................    $      16,992        $      16,924
               Income taxes............................................................               --               15,109
                                                                                           =============        =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        3

<PAGE>

                        CALIFORNIA STEEL INDUSTRIES, INC.
                                 AND SUBSIDIARY
             Notes To Consolidated Financial Statements (Unaudited)

1.       Basis of Presentation
         ---------------------

         The accompanying unaudited consolidated financial statements of
California Steel Industries, Inc. and its subsidiary as of and for the three
months and nine months ended September 30, 2001 and 2000 have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. However, the
information reflects all adjustments (consisting only of normal recurring
adjustments) that, in the opinion of our management, are necessary to present
fairly the financial position and results of operations for the periods
indicated.

         The accompanying consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes
contained in California Steel Industries, Inc.'s Form 10-K for each of the
fiscal years ended December 31, 2000 and 1999. Results of operations for the
three and nine months ended September 30, 2001 are not necessarily indicative of
results expected for the full year.

2.       New Accounting Pronouncements
         -----------------------------

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes
accounting and reporting standards for derivative instruments, including
derivative instruments embedded in other contracts, and hedging activities. SFAS
133, as amended by SFAS 137 and SFAS 138, is effective for all fiscal quarters
of fiscal years beginning after June 15, 2000. The Company adopted SFAS 133, as
amended by SFAS 137 and SFAS 138 on January 1, 2001 and the adoption did not
have any material impact on its financial position, results of operations or
liquidity.

         In July 2001, the Financial Accounting Standards Board issued SFAS No.
141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires that all business combinations be accounted for
under a single method - the purchase method. Use of the pooling-of-interests
method is no longer permitted and is effective for all business combinations
initiated after June 30, 2001. SFAS No. 142 requires that goodwill no longer be
amortized to earnings, but instead reviewed for impairment. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001. The Company
believes the future adoption of these statements will not have a material impact
on its financial position, results of operations or liquidity.

         The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement
Obligations" in September 2001. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002, which addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. Management has not assessed
whether the application of these standards will have a material effect on the
Company's financial position, results of operations or liquidity.

                                        4

<PAGE>

         The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" in October 2001. SFAS No. 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS No. 144 is effective for fiscal years beginning after December 15, 2001.
Management has not assessed whether the application of these standards will have
a material effect on the Company's financial position, results of operations or
liquidity.

3.       Inventories
         -----------

         Inventories are stated at the lower of cost (determined under the
first-in, first-out method of accounting) or market value.

<TABLE>
<CAPTION>
                                                                 September 30,         December 31,
                                                                     2001                  2000
                                                              -------------------   ------------------
                                                                            (In thousands)
              <S>                                             <C>                   <C>
              Finished goods...............................        $ 28,677                  $ 44,289
              Work-in-process..............................          26,759                    37,310
              Raw materials................................          89,139                   131,939
              Other........................................           5,573                     5,041
                                                                 ----------                ----------
                  Total....................................        $150,148                  $218,579
                                                                 ==========                ==========
</TABLE>

                                        5

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Forward-Looking Statements
--------------------------

         Certain statements contained in this Form 10-Q regarding matters that
are not historical facts and are forward-looking statements (as such term is
defined in the rules promulgated pursuant to the Securities Act of 1933, as
amended). Such forward-looking statements include any statement that may
predict, forecast, indicate or imply future results, performance or
achievements, and may contain the words "anticipate," "believe," "estimate,"
"expect," "project," "imply," "intend," "foresee," "will be," "will continue,"
"will likely result," and similar words and expressions. Such forward-looking
statements reflect our current views about future events, but are not guarantees
of future performance and are subject to risk, uncertainties and assumptions.
Such risks, uncertainties and assumptions include those specifically identified
in this Form 10-Q and the following:

         .    our substantial indebtedness, interest expense and principal
              repayment obligations under our bank facility and 8.5% senior
              notes, which could limit our ability to use operating cash flow in
              our business other than for debt-servicing obligations, obtain
              additional financing and react to changing market and general
              economic conditions, and which increase our vulnerability to
              interest rate increases,

         .    because our board of directors consists of four members and is
              elected by our two stockholders, each of whom holds 50% of our
              stock, there is a possibility of deadlocks among our board of
              directors that could result in costly delays in making important
              business decisions and put us at a competitive disadvantage,

         .    fluctuations in commodity prices for our electricity and natural
              gas requirements,

         .    competitive factors and pricing pressures,

         .    our ability to control costs and maintain quality,

         .    future expenditures for capital projects, and

         .    industry-wide market factors and general economic and business
              conditions.

Results of Operations
---------------------

<TABLE>
<CAPTION>
                                                     Tons Billed                        Tons Billed
                                                 Three months ended                 Nine months ended
                                                    September 30,                      September 30,
                                           --------------------------------   --------------------------------
                                                2001              2000             2001              2000
                                           --------------    --------------   --------------    --------------
          <S>                              <C>               <C>              <C>               <C>
          Hot Rolled...................        218,561           179,224           616,404          570,314
          Cold Rolled..................         66,710            66,871           199,807          221,371
          Galvanized...................        168,170           164,732           464,384          482,439
          ERW Pipe.....................         35,244            35,860            97,681          104,620
                                               -------           -------         ---------        ---------
          Total........................        488,685           446,687         1,378,276        1,378,744
                                               =======           =======         =========        =========
</TABLE>

                                        6

<PAGE>

         Net sales. Net sales decreased $18,505,000, or 9.9%, from $186,796,000
for the three months ended September 30, 2000 to $168,291,000 for the three
months ended September 30, 2001. Our year-to-date net sales decreased
$81,869,000 or 14.3% from $570,988,000 for nine months ended September 30, 2000
to $489,119,000 for the same period in year 2001. Net tons billed increased
41,998 for the three months ended September 30, 2001 to 488,685 from 446,687 for
the same period in year 2000, our year-to-date net tons billed almost stayed the
same from 1,378,744 for the nine months ended September 30, 2000 to 1,378,276
for the nine months ended September 30, 2001. The average sales price for our
products fell for both the three and nine-month periods ended September 30, 2001
when compared to the same periods of 2000.

         Gross profit. Gross profit decreased $12,232,000, or 76.5%, from
$15,986,000 for the three months ended September 30, 2000 to $3,754,000 for the
three months ended September 30, 2001 and $73,301,000 or 78.5% from $93,402,000
for the nine months ended September 30, 2000 to $20,101,000 for the same period
in year 2001. Gross profit as a percentage of net sales also decreased from 8.6%
for the three months ended September 30, 2000 to 2.2% for the same period in
2001 and from 16.4% for the nine months ended September 30, 2000 to 4.1% for the
same period in year 2001. Our gross profit for the nine months ended September
30, 2001, decreased mainly due to a reduction in our average sales price, and an
increase in our utility costs. The decrease in gross profit was partially offset
by lower slab consumption costs. The average unit price we paid for natural gas
during the three months and nine months ended September 30, 2001 was 148% and
227% higher than the average unit price we paid during the three and nine months
ended September 30, 2000, resulting in increased costs of approximately
$2,750,000 and $15,989,000, respectively. The average unit price we paid for
electricity during the three and nine months ended September 30, 2001 was 189%
and 152% higher than the average unit price we paid during the three and nine
months ended September 30, 2000, resulting in increased costs of approximately
$3,824,000 and $6,267,000 respectively.

         Selling, general and administrative expenses (SG&A). Selling, general
and administrative expenses decreased $924,000, or 13.5%, from $6,824,000 for
three months ended September 30, 2000 to $5,900,000 for three months ended
September 30, 2001. Our year-to-date SG&A expenses also decreased $6,635,000, or
27.6%, from $24,069,000 for nine months ended September 30, 2000 to $17,434,000
for nine months ended September 30, 2001. A reduction in management performance
compensation and various other administrative expenses contributed to this
decrease.

         Equity in income of affiliate. We maintain a 1.5% ownership interest in
Companhia Siderurgica de Tubarao, which is based on our ownership of 4.0% of its
common stock. Our investment in Companhia Siderurgica de Tubarao is accounted
for under the equity method of accounting. For the three and nine months ended
September 30, 2001, we recognized a loss of from our investment in Companhia
Siderurgica de Tubarao of $33,000 and income of $907,000 compared to income of
$937,000 and $1,547,000 for the same periods in 2000.

         Interest expense. Net interest expense decreased $875,000 or 18.1%,
from $4,821,000 for the three months ended September 30, 2000 to $3,946,000 for
the same period in 2001 and $894,000, or 6.6%, from $13,620,000 for the nine
months ended September 30, 2000 to $12,726,000 for the same period in 2001. Our
average outstanding debt decreased during the first nine months of 2001 compared
to the same period of 2000, and our effective interest rates during the first
nine months of 2001 also decreased compared to the same period of 2000. Interest
expense figures are net of interest income and capitalized interest of $150,000
and $544,000 for the three and nine months ended September 30, 2000 respectively
$80,000 and $300,000 for the same periods in 2001.

                                        7

<PAGE>

     Income taxes. As a result of a loss before income taxes of $6,100,000, we
had an income tax benefit of $2,609,000 for the three-month period ended
September 30, 2001 compared to income before income taxes of $5,507,000 and
income tax expense of $2,091,000 for the same period of 2000. As a result of a
loss before income taxes of $7,598,000, an income tax benefit of $3,801,000 was
recognized for the nine months ended September 30, 2001 compared to income
before income taxes of $58,131,000 and income tax expense of $23,561,000 for the
same period of 2000. Our effective tax benefit rate was 42.8% for three months
ended September 30, 2001, compared to effective tax rate of 38.0% for three
months ended September 30, 2000. Our effective tax benefit rate for the
nine-month period ending September 30, 2001 was 50.0% compared to the effective
tax rate of 40.5% for the nine-month period ending September 30, 2000. The
difference in the effective tax rate was due to an increase in the California
State Manufacturers' Investment Tax Credit (MIC) recorded in the three and nine
month periods ending September 30, 2001 compared to the MIC recorded in the same
periods in 2000.

     Net income(loss). Net loss for the three months ended September 30, 2001
was $3,491,000 compared to the net income of $3,416,000 for the three months
ended September 30, 2000, a decrease in income of $6,907,000. Our net loss for
the nine months ended September 30, 2001 was $3,797,000 compared to the net
income of $34,570,000 for the nine months ended September 30, 2000, a decrease
of $38,367,000 in income.

Liquidity and Capital Resources
-------------------------------

     At September 30, 2001, we had $1,198,000 in cash and cash equivalents and
approximately $62,000,000 in financing available under our credit facility.
During the nine months ended September 30, 2001, cash flows from operations
generated $51,948,000, which consisted primarily of a $3,797,000 net loss,
$22,649,000 in depreciation and amortization expense and a net cash flow
increase of $33,760,000 due to changes in assets and liabilities. The majority
of the net cash flow changes in assets and liabilities were attributable to a
$68,431,000 decrease in inventories and a $24,310,000 decrease in accounts
payable. Cash flows from investing activities during the nine months ended
September 30, 2001 consisted predominantly of $13,292,000 of capital
expenditures. Cash flows from financing activities during the nine months ended
September 30, 2001 consisted of net repayments under our credit facilities of
$37,000,000 and a dividend payment to shareholders of $3,000,000. During the
nine months ended September 30, 2001, we also paid $12,750,000 in interest on
our 8.5% senior notes.

     In March 1999, we entered into a new $130,000,000 five-year bank facility.
Approximately $52,000,000 was outstanding under this facility as of September
30, 2001. The bank facility is collateralized by cash, accounts receivable,
inventory and other assets. Subject to the satisfaction of customary conditions
and a borrowing base, advances under the bank facility may be made at any time
prior to the bank facility termination date, which is the earlier to occur of
March 10, 2004 or the date which is 60 days prior to the maturity of the 8.5%
senior notes. Advances under this facility may be used for working capital,
capital expenditures and other lawful corporate purposes, including the
refinancing of existing debt.

                                        8

<PAGE>

     On March 12, 2001, we entered into a second amendment to our five-year bank
facility. This second amendment modified certain financial covenants applicable
to fiscal year 2001 only. As a result, the fixed charge coverage ratio tests at
the end of March 31, June 30 and September 30, 2001 were replaced by a minimum
cumulative EBITDA (earnings before interest, taxes, depreciation and
amortization, as defined) requirements of $1,000,000, $15,000,000 and
$34,000,000, respectively. The second amendment also limits our capital
expenditures during fiscal year 2001 to $20,000,000 and modifies our pricing
grid from a range of 70 to 100 basis points to a range of 100 to 230 basis
points. On June 12, 2001 we entered into a third amendment to our bank facility.
Under this amendment we replaced certain banks for our bank facility and
reallocated each bank's commitment amount. On September 26, 2001, we entered
into a fourth amendment to our bank facility that modified one financial
covenant applicable to September 30, 2001 only. As a result of this agreement, a
minimum cumulative EBITDA requirements of $34,000,000 at September 30, 2001 was
replaced by a minimum EBITDA of $26,000,000. We were in compliance with all
terms and conditions of our bank facility, as amended, at September 30, 2001.

     We anticipate that our primary liquidity requirements for 2001 will be for
working capital, capital expenditures and debt service. We believe that cash
generated from operations and available borrowings under our bank facility will
be sufficient to enable us to meet our liquidity requirements for fiscal 2001.

                                        9

<PAGE>

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risks related to fluctuations in interest rates on
our $130,000,000 floating interest rate bank facility. We do not currently use
interest rate swaps or other types of derivative financial instruments.

     For fixed rate debt instruments such as our 8.5% senior notes, changes in
interest rates generally affect the fair value of such debt instruments. For
variable rate debt such as our bank facility, changes in interest rates
generally do not affect the fair value of such debt, but do affect earnings and
cash flow. We do not have an obligation to repay our 8.5% senior notes prior to
maturity in 2009 and, as a result, interest rate risk and changes in fair value
should not have a significant impact on us. We believe that the interest rate on
our 8.5% senior notes approximates the current rates available for similar types
of financing and as a result the carrying amount of the 8.5% senior notes
approximates fair value. The carrying value of the floating rate bank facility
approximates fair value as the interest rate is variable and resets frequently.
The bank facility bears interest at the Eurodollar rate, which was approximately
2.6875%, plus margin at September 30, 2001. We estimate that the average amount
of debt outstanding under the facility for the next twelve months will be
approximately $60.0 million. Therefore, a one-percentage point increase in
interest rates would result in an increase in interest expense of $600,000 for
the year.

     We do not believe that the future market rate risk related to our 8.5%
senior notes and floating rate bank facility will have a material impact on our
financial position, results of operations or liquidity.

     Historically, we have been exposed to market risks related to the
volatility of natural gas prices. We generally purchase natural gas on an annual
contract basis from a physical supplier active in the California market. The
price we normally pay for natural gas is based on the New York Mercantile
Exchange (NYMEX) natural gas commodity index, which is a commonly referenced
index in the industry for natural gas purchases, and an additional delivery cost
to the California border commonly known as the basis cost.

     During 2000 and continuing through much of the second quarter of 2001,
rising and volatile natural gas prices negatively affected our profitability. In
February, May and September of 2001, we entered into natural gas purchase
agreements to reduce our exposure to natural gas price volatility derived from
the NYMEX natural gas commodity index.

     As a result of electricity shortages occurring during the calendar year
2001, the state of California has directly participated in the supply of
electric power to local consumers. Concurrently, the State dramatically
increased the price consumers' pay for electricity. In our case, power rates
have increased by more than 100% when compared to similar periods in 2000. In
order to mitigate the effects of the State's intervention, we are participating
in the Direct Access program whereby electricity customers can contract directly
with energy service providers, thereby bypassing the state of California
procurement system. We recently entered into an amended agreement with an energy
services provider which enhances our ability to purchase our power requirements
at a reduced rate. The agreement, as amended, is resulting in lower electricity
costs beginning in September 2001, through December 2002. The Public Utilities
Commission of the State of California ("PUC") issued an order on September 20,
2001, suspending the ability of parties to enter into new Direct Access
contracts as of that date. Said order also indicates that the PUC is considering
several future actions regarding Direct Access, including potential exit fees or
even an attempt to suspend some contracts retroactively. If such an order is
adopted, it could potentially affect our ability to continue obtaining
electricity service at a reduced price.

                                       10

<PAGE>

                                     PART II
                                OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     We are from time to time in the ordinary course of business, subject to
various pending or threatened legal actions. We believe that any ultimate
liability arising from pending or threatened legal actions should not have a
material adverse effect on our financial position, results of operations or
liquidity.

                                       11

<PAGE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)    Exhibits.

Exhibit
-------
Number         Description
------         -----------

   3.1         Certificate of Incorporation of the Registrant, as amended by
               Amendment to the Certificate of Incorporation filed June 6, 1984
               with Delaware Secretary of State, as amended by the Certificate
               of Amendment to the Certificate of Incorporation filed August 2,
               1984 with the Delaware Secretary of State, as amended by the
               Certificate of Amendment to the Certificate of Incorporation
               filed January 12, 1988 with the Delaware Secretary of State, and,
               as amended by the Certificate of Ownership merging CSI Tubular
               Products, Inc. into the Registrant filed with the Delaware
               Secretary of State on December 20, 1993.(1)

   3.2         Bylaws of the Registrant.(1)


   4.1         Indenture dated as of April 6, 1999 between the Registrant and
               State Street Bank Trust Company of California, N.A., Trustee,
               relating to the Registrant's 8 1/2% Senior Notes due April 6,
               2009.(1)

   4.2         Specimen Series A note (included in Exhibit 4.1).(1)

   4.3         Shareholders' Agreement, dated June 27, 1995, by and among Rio
               Doce Limited, Companhia Vale do Rio Doce, Kawasaki Steel Holdings
               (USA), Inc. and Kawasaki Steel Corporation.(1)

   4.4         Fourth Amendment to Revolving Credit Agreement dated September
               26, 2001, among the Registrant, the Banks named therein, Bank of
               America, N.A., as loan and collateral agent for the Banks, and
               Bank of America, N.A., as documentation and letter of credit
               agent for the Banks.


____________________
(1)    Incorporated by reference to the Registrant's Registration Statement on
       Form S-4, File No. 333-79587, as filed with the Securities and Exchange
       Commission on May 28, 1999, as amended.


(b)    Reports on Form 8-K.

           None.

                                       12

<PAGE>

                                    SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

November 8, 2001
                                      CALIFORNIA STEEL INDUSTRIES, INC.



                                      By: /s/ Vicente B. Wright
                                          --------------------------------------
                                              Vicente B. Wright,
                                              Executive Vice President, Finance
                                              (Principal Financial and
                                              Accounting Officer)


                                       13

<PAGE>

                                INDEX TO EXHIBITS

Exhibit
Number         Description
------         -----------

   3.1         Certificate of Incorporation of the Registrant, as amended by
               Amendment to the Certificate of Incorporation filed June 6, 1984
               with Delaware Secretary of State, as amended by the Certificate
               of Amendment to the Certificate of Incorporation filed August 2,
               1984 with the Delaware Secretary of State, as amended by the
               Certificate of Amendment to the Certificate of Incorporation
               filed January 12, 1988 with the Delaware Secretary of State, and,
               as amended by the Certificate of Ownership merging CSI Tubular
               Products, Inc. into the Registrant filed with the Delaware
               Secretary of State on December 20, 1993.(1)

   3.2         Bylaws of the Registrant.(1)


   4.1         Indenture dated as of April 6, 1999 between the Registrant and
               State Street Bank Trust Company of California, N.A., Trustee,
               relating to the Registrant's 8 1/2% Senior Notes due April 6,
               2009.(1)

   4.2         Specimen Series A note (included in Exhibit 4.1).(1)

   4.3         Shareholders' Agreement, dated June 27, 1995, by and among Rio
               Doce Limited, Companhia Vale do Rio Doce, Kawasaki Steel Holdings
               (USA), Inc. and Kawasaki Steel Corporation.(1)

   4.4         Fourth Amendment to Revolving Credit Agreement dated September
               26, 2001, among the Registrant, the Banks named therein, Bank of
               America, N.A., as loan and collateral agent for the Banks, and
               Bank of America, N.A., as documentation and letter of credit
               agent for the Banks.



________________________
(1)    Incorporated by reference to the Registrant's Registration Statement on
       Form S-4, File No. 333-79587, as filed with the Securities and Exchange
       Commission on May 28, 1999, as amended.

                                       14