FORM 10-Q


	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C.  20549


(Mark One)
  X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
       EXCHANGE ACT OF 1934

For the quarterly period ended          June 26, 1999
	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 No.  0-22416

	KENTUCKY ELECTRIC STEEL, INC.
	(Exact name of Registrant as specified in its charter)

            Delaware                                61-1244541
(State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                     Identification
                                                       Number)

	   P. O. Box 3500, Ashland, Kentucky 41105-3500
	(Address of principal executive office, Zip Code)

	(606) 929-1222


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.


	YES    x         NO

The number of shares outstanding of each of the issuer's classes of
common stock, as of August 6, 1999, is as follows:


4,067,143 shares of voting common stock, par value $.01 per
share.

<PAGE>

	KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY


	TABLE OF CONTENTS



                                                                   Page

PART I.  FINANCIAL INFORMATION

   Item 1 - Financial Statements

 	      Condensed Consolidated Balance Sheets ............        3

            Condensed Consolidated Statements of Operations ..        4

            Condensed Consolidated Statements of Cash Flows ..        5

            Notes to Condensed Consolidated Financial Statements    6-8

   Item 2 - Management's Discussion and Analysis of Financial
              Condition and Results of Operations ............     9-13


PART II.    OTHER INFORMATION

   Item 6 - Exhibits and Reports on Form 8-K .................       14


            SIGNATURES  ......................................       15
<PAGE>

<TABLE>
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
                                                   June 26,  Sept. 26,
                                                      1999      1998
<S>                                                 <C>       <C>
                       ASSETS
   CURRENT ASSETS
     Cash and cash equivalents                      $    141  $    150
     Accounts receivable, less allowance for doubtful
       accounts and claims of $442 at June 26, 1999
       and $460 at September 26, 1998                 13,578    12,037
     Inventories                                      20,151    20,363
     Operating supplies and other current assets       5,523     5,206
     Deferred tax assets                                 796       648

       Total current assets                           40,189    38,404

   PROPERTY, PLANT AND EQUIPMENT
     Land and buildings                                4,607     4,532
     Machinery and equipment                          43,078    42,004
     Construction in progress                          4,252     3,031
     Less - accumulated depreciation                 (17,384)  (14,772)

          Net property, plant and equipment           34,553    34,795

   DEFERRED TAX ASSETS                                 5,418     5,990

   OTHER ASSETS                                        1,204     1,062

          Total assets                              $ 81,364  $ 80,251

        LIABILITIES AND SHAREHOLDERS' EQUITY
   CURRENT LIABILITIES
     Advances on line of credit                     $ 12,326  $ 11,397
     Accounts payable                                  8,618     7,056
     Capital expenditures payable                        375       857
     Accrued liabilities                               3,722     3,834
     Environmental liabilities                          -          982
     Current portion of long-term debt                   125       125
                                                         ----     --
          Total current liabilities                   25,166    24,251

   LONG-TERM DEBT                                     20,000    20,000

   OTHER LIABILITIES                                   1,093       808

          Total liabilities                           46,259    45,059

   SHAREHOLDERS' EQUITY
     Preferred stock, $.01 par value, 1,000,000
       shares authorized, no shares issued              -         -
     Common stock, $.01 par value, 15,000,000
       shares authorized, 4,999,724 and 4,985,937
       share issued, respectively                         50        50
     Additional paid-in capital                       15,715    15,671
     Less treasury stock - 932,581 and 526,996
       shares at cost, respectively                   (4,272)   (3,254)
     Deferred compensation                               (40)      (73)
     Retained earnings                                23,652    22,798

         Total shareholders' equity                   35,105    35,192

         Total liabilities and shareholders' equity $ 81,364  $ 80,251

<FN>
See notes to condensed consolidated financial statements
</TABLE>
<TABLE>
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Share and Per Share Data)
(Unaudited)


                              Three Months Ended      Nine Months Ended
                              June 26,  June 27,    June 26,   June 27,
                                1999      1998        1999       1998
<S>                           <C>       <C>         <C>        <C>
NET SALES                   $  27,421  $  27,751   $ 78,997   $ 83,381
COST OF GOODS SOLD             23,710     24,294     71,250     74,161

  Gross profit                  3,711      3,457      7,747      9,220

SELLING AND ADMINISTRATIVE
  EXPENSES                      2,229      1,832      5,862      5,421

  Operating income              1,482      1,625      1,885      3,799

INTEREST INCOME AND OTHER       1,147         20      1,197         44
INTEREST EXPENSE                 (584)      (594)    (1,704)    (1,816)

  Income before income taxes    2,045      1,051      1,378      2,027

PROVISION FOR INCOME
  TAXES                           776        399        524        771

  Net income                 $  1,269   $    652   $    854   $  1,256

NET INCOME PER COMMON SHARE
  - BASIC AND DILUTED        $    .31   $    .14   $    .21   $    .27

WEIGHTED AVERAGE SHARES
  OUTSTANDING - BASIC       4,064,920  4,626,375  4,090,817  4,626,264

WEIGHTED AVERAGE SHARES
  OUTSTANDING - DILUTED     4,064,920  4,630,192  4,092,949  4,632,513
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<TABLE>

KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)


                                                   Nine Months Ended
                                                  June 26,    June 27,
                                                    1999        1998
<S>                                               <C>         <C>
Cash Flows From Operating Activities:
  Net income                                      $    854    $  1,256
  Adjustments to reconcile net income to net
    cash flows from operating activities:
      Depreciation and amortization                  2,688       2,741
      Change in deferred taxes                         572       1,023
      Change in other                                  100        (114)
      Change in current assets and current
        liabilities:
          Accounts receivable                       (1,541)     (2,035)
          Insurance claim receivable                  -            900
          Inventories                                  212      (5,067)
          Operating supplies and other
            current assets                            (317)       (179)
          Refundable income taxes                     -            900
          Deferred tax assets                         (148)        (82)
          Accounts payable                           1,562       1,623
          Accrued liabilities                         (112)       (323)
          Environmental liabilities                   (982)       -

          Net cash flows from operating activities   2,888         643

Cash Flows From Investing Activities:
  Capital expenditures                              (2,370)     (2,042)
  Change in capital expenditures payable              (482)        282

          Net cash flows from investing activities  (2,852)     (1,760)

Cash Flows From Financing Activities:
  Net advances on line of credit                       929       1,128
  Purchases of treasury stock                       (1,018)        (37)
  Issuance of common stock                              44          35

          Net cash flows from financing activities     (45)      1,126

          Net increase (decrease) in cash
            and cash equivalents                        (9)          9

Cash and Cash Equivalents at Beginning of Period       150         127

Cash and Cash Equivalents at End of Period        $    141    $    136

Interest Paid, net of amount capitalized          $  2,082    $  2,181

Income Taxes Paid                                 $    100    $     50
<FN>

            See notes to condensed consolidated financial statements
</TABLE>
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)  Basis of Presentation

The accompanying unaudited condensed consolidated financial
statements represent Kentucky Electric Steel, Inc. and its
wholly-owned subsidiary, KESI Finance Company, (collectively the
Company). All significant intercompany accounts and transactions
have been eliminated. These statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q
and Article 10 of Regulation S-X.  Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements.  In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included.  Operating results
for the three-month and nine-month periods ended June 26, 1999,
are not necessarily indicative of the results that may be
expected for the year ending September 25, 1999. For further
information, refer to the financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for
the year ended September 26, 1998.

(2)  Accounting Policies

     Fiscal Year End
The Company's fiscal year ends on the last Saturday of
September.

     Property, Plant, Equipment and Depreciation
     Property, plant and equipment is recorded at cost, less
accumulated depreciation. For financial reporting purposes,
depreciation is provided on the straight-line method over the
estimated useful lives of the assets, generally 3 to 12 years for
machinery and equipment and 15 to 30 years for buildings and
improvements.  Depreciation for income tax purposes is computed
using accelerated methods.  Expenditures for maintenance and
repairs are charged to expense as incurred.  Expenditures for
equipment renewals which extend the useful life of any asset are
capitalized.

	Comprehensive Income
	In June 1997, the Financial accounting Standards Board
issued Statement of Financial Accounting Standards No. 130 (SFAS
No. 130), "Reporting Comprehensive Income", which established
standards for reporting and display of comprehensive income and
its components (revenues, expenses, gains and losses) in a full
set of general-purpose financial statements.  The Company adopted
SFAS No. 130 in the quarter ended December 26, 1998.  For the
periods disclosed, comprehensive income is equal to net income
reported.

(3)  Inventories

	Inventories at June 26, 1999 and September 26, 1998 consist
of the following ($000's):
<TABLE>                                   June 26,      Sept. 26,
                                       1999          1998
      <S>                                 <C>           <C>
	 Raw materials                       $  2,133      $  1,984
      Semi-finished and finished goods      18,018        18,379
           Total inventories                 $ 20,151      $ 20,363
</TABLE>

(4)	Earnings Per Share

		Statement of Financial Accounting Standards No. 128 (SFAS
No. 128) related to earnings per share requires dual presentation
of basic and diluted E.P.S. on the face of the income statement
for all entities with complex capital structures.  The Company
adopted SFAS No. 128 during the first quarter of fiscal 1998. The
following is the reconciliation of the numerators and
denominators of the basic and diluted earnings per share
computations.
<TABLE>

                                  For the Three                For the Three
                                  Months Ended                 Months Ended
                                  June 26, 1999                 June  27, 1998
                                                Per                         Per
                                                Share                       Share
                           Income     Shares    Amount   Income     Shares  Amount
<S>                        <C>        <C>       <C>      <C>        <C>     <C>
Amounts for Basic
 Earnings Per Share       $1,269    4,064,920    $.31   $  652    4,626,375  $ .14

Effect of Dilutive
 Securities Options         -            -         -       -          3,817     -
Amounts for Diluted
 Earnings Per Share       $1,269    4,064,920    $.31   $  652    4,630,192  $ .14



                                  For the Nine                 For the Nine
                                  Months Ended                 Months Ended
                                  June 26, 1999                June  27, 1998
                                                Per                          Per
                                                Share                        Share
                           Income     Shares    Amount   Income    Shares   Amount
<S>                        <C>        <C>       <C>      <C>       <C>      <C>
Amounts for Basic
 Earnings Per Share       $   854   4,090,817    $.21   $ 1,256  4,626,264  $ .27

Effect of Dilutive
 Securities Options          -          2,132      -       -         6,249     -
Amounts for Diluted
 Earnings Per Share       $   854   4,092,949    $.21   $ 1,256  4,632,513  $ .27
</TABLE>

		The following options, outstanding at the end of the
respective periods, were not included in the computation of
diluted earnings per share because to do so would have been
antidilutive for the applicable period:

<TABLE>
                 For the Three    For the Three     For the Nine     For the Nine
                  Months Ended     Months Ended     Months Ended     Months Ended
     Options         June 26, 1999    June 27, 1998    June 26, 1999    June 27, 1998
    <S>              <C>              <C>              <C>              <C>
Transition stock      57,524          137,016           57,524          137,016
Employee stock       469,860          301,976          378,668          301,976
</TABLE>


(5)  Environmental Liabilities

The Company's melt shop operations were shut down for twelve
days during the third quarter of fiscal 1997 in order to
decontaminate its baghouse facilities after detection of a
radioactive substance in the baghouse dust, a by-product of the
melting process.

The $1.0 million in environmental liabilities recorded as a
current liability on the balance sheet at September 26, 1998,
represents final payment due an environmental services company
for treatment and disposal of the contaminated baghouse dust.
Payment for the disposal occurred during the third quarter of
fiscal 1999.


(6)  Commitments and Contingencies

The Company has various commitments for the purchase of
materials, supplies and energy arising in the ordinary course of
business.

The Company is subject to various claims, lawsuits and
administrative proceedings arising in the ordinary course of
business with respect to commercial, product liability and other
matters, which seek remedies or damages. The Company believes
that any liability that may ultimately be determined will not
have a material effect on its financial position or results of
operations.

The Company generates both hazardous wastes and non-
hazardous wastes which are subject to various governmental
regulations.  Estimated costs to be incurred in connection with
environmental matters are accrued when the prospect of incurring
costs for testing or remedial action is deemed probable.  The
Company is not aware of any material asserted or unasserted
environmental claims against the Company and no accruals for such
matters have been recorded in the accompanying balance sheets
except as disclosed in Note 5.  However, discovery of unknown
conditions could result in the recording of accruals in the
periods in which they become known.


(7)  Claim Settlement

     The fiscal 1999 third quarter and nine month periods include
other income of $1.1 million for a claim settlement pertaining to
the Company's purchase of electrodes during the years 1992 to
1997.
<PAGE>

KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


General.  The Company manufactures special bar quality alloy
and carbon steel bar flats to precise customer specifications for
sale in a variety of niche markets.  Its primary markets are
manufacturers of leaf-spring suspensions and flat bed truck
trailers, cold drawn bar converters, and steel service centers.

Net Sales.  Net sales decreased $.4 million (1.2%) in the
third quarter of fiscal 1999 to $27.4 million as compared to
$27.8 million for the third quarter of fiscal 1998.  The decrease
in sales for the third quarter is due to a decrease in the
average selling price offset by higher shipments.  The average
selling price per ton was down 7.5% for the third quarter of
fiscal 1999 as compared to the third quarter of fiscal 1998.
Tons shipped increased 6.8%, from 60,400 in the third quarter of
fiscal 1998 to 64,500 in the third quarter of fiscal 1999.

Net sales for the nine months ended June 26, 1999 decreased
$4.4 million (5.3%) to $79.0 million, as compared to $83.4
million for the nine months ended June 27, 1998.  The decrease in
sales is attributed to a decrease in the average selling price
and a decrease in shipments. The average selling price per ton
decreased 4.3% for the first nine months of fiscal 1999 from the
comparable period of fiscal 1998. Shipments for the first nine
months of fiscal 1999 were 181,800 tons down 1.0% from the
comparable period of fiscal 1998.  The decrease in average
selling price for the third quarter and the first nine months of
fiscal 1999 is primarily attributable to market price reductions.

Cost of Goods Sold.  Cost of  goods  sold decreased $.6
million (2.4%) in the third quarter of fiscal 1999 to $23.7
million, as compared to $24.3 million for the third quarter of
fiscal 1998.  As a percentage of net sales, cost of goods sold
decreased from  87.5% for the third quarter of fiscal 1998 to
86.5% for the third quarter of fiscal 1999. The decrease in cost
of goods sold is primarily due to lower manufacturing costs
offset by a 6.8% increase in tons shipped. The per ton cost of
shipments in the third quarter of fiscal 1999 was significantly
lower than in the third quarter of fiscal 1998 reflecting lower
scrap prices.

     Cost of goods sold for the nine months ended June 26, 1999
decreased $2.9 million (3.9%) to $71.3 million as compared to
$74.2 million for the nine months ended June 26, 1998. As a
percentage of net sales, cost of goods sold increased from 88.9%
for the nine months ended June 26, 1998 to 90.2% for the nine
months ended June 26, 1999. The decrease in cost of goods sold
reflects the decrease in shipments and a decrease in the per ton
cost of tons shipped. The decrease in the per ton cost of tons
shipped during the first nine months of fiscal 1999 as compared
to the first nine months of fiscal 1998 resulted from lower scrap
prices offset by higher conversion costs due to lower production
in the first two quarters of fiscal 1999.

Gross Profit. As a result of the above, gross profit for the
third quarter of fiscal 1999 increased by $.2 million (7.3%) to
$3.7 million from $3.5 million for the third fiscal quarter of
1998. As a percentage of net sales, gross profit increased from
12.5% for the third quarter of fiscal 1998 to 13.5% for the third
quarter of fiscal 1999.

		As a result of the above, gross profit for the nine months
ended June 26, 1999 decreased by $1.5 million (16.0%) to $7.7
million as compared to $9.2 million for the nine months ended
June 27, 1998.  As a percentage of net sales, gross profit
decreased from 11.1% for the first nine months of fiscal 1998 to
9.8% for the first nine months of fiscal 1999.

Selling and Administrative Expenses.  Selling and
administrative expenses include salaries and benefits, corporate
overhead, insurance, sales commissions and other expenses
incurred in the executive, sales and marketing, shipping,
personnel, and other administrative departments. Selling and
administrative expenses increased by approximately $397,000 and
$441,000 for the three months and nine months ended June 26,
1999, as compared to the same periods in fiscal 1998. As a
percentage of net sales, such expenses increased from 6.6% for
the third quarter of fiscal 1998 to 8.1% for the third quarter of
fiscal 1999, and from 6.5% for the nine months ended June 27,
1998 to 7.4% for the nine months ended June 26, 1999. The
increase in selling and administrative expenses is due primarily
to an increase in legal and professional fees and self-insured
health care costs incurred during the third fiscal quarter of
1999. The increase in legal and professional fees is primarily
due to legal and consulting fees related to the Company's
electric service contract and a pending trade case with the
Department of Commerce.

Operating Income.  For the reasons described above,
operating income decreased $143,000 from $1.6 million in the
third quarter of fiscal 1998 to $1.5 million in the third quarter
of fiscal 1999. As a percentage of net sales, operating income
decreased from 5.9% in the third quarter of 1998 to 5.4% in the
third quarter of 1999.

		Similarly, operating income decreased $1.9 million from $3.8
million for the first nine months of fiscal 1998 to $1.9 million
for the nine months ended June 26, 1999.  As a percentage of net
sales, operating income decreased from 4.6% for the nine months
ended June 27, 1998 to 2.4% for the nine months ended June 26,
1999.

     Interest Income and Other.  Interest and other income
increased by $1.1 million for the three months ended June 26,
1999 from $20,000 for the third quarter of fiscal 1998 to
$1,147,000 for the third quarter of fiscal 1999.  Interest and
other income increased by $1.2 million for the nine months ended
June 26, 1999 from $44,000 for the nine months ended June 27,
1998 to $1.2 million for the nine months ended June 26, 1999.
The fiscal 1999 third quarter and nine month periods include
other income of $1.1 million for a claim settlement pertaining to
the Company's purchase of electrodes during the years 1992 to
1997.

Interest Expense.  Interest expense decreased by $10,000 for
the three months ended June 26, 1999 from $594,000 for the third
quarter of fiscal 1998 to $584,000 for the third quarter of
fiscal 1999. Interest expense decreased by $112,000 for the nine
months ended June 26, 1999 from $1.8 million for the nine months
ended June 27, 1998 to $1.7 million for the nine months ended
June 26, 1999. The decrease in interest expense for the third
quarter is primarily due to a decrease in the interest rate on
the Company's line of credit.  The decrease in interest expense
for the first nine months of fiscal 1999 is due to a decrease in
the average amount outstanding as well as a decrease in the
interest rate on the Company's line of credit.

Net Income.  As a result of the above, net income increased
$617,000 from $652,000 for the third quarter of fiscal 1998 to
$1,269,000 for the third quarter of fiscal 1999.

	   As a result of the above, net income decreased $402,000 from
$1,256,000 for the first nine months of fiscal 1998 to $854,000
for the first nine months of fiscal 1999.

Liquidity and Capital Resources

	   The cash flows provided by operating activities were $2.9
million for the first nine months of fiscal 1999 as compared to
$.6 million for the first nine months of fiscal 1998.  The first
nine months of fiscal 1999 reflect the profitable operations of
$.9 million, $2.7 million in depreciation and amortization, an
increase of $1.5 million in accounts receivable, an increase of
$1.6 million in accounts payable and a decrease of $1.0 in
environmental liabilities.  The first nine months of fiscal 1998
reflect the profitable operations of $1.3 million, $2.7 million
in depreciation and amortization, an increase in accounts
receivable of $2.0 million, an increase in inventories of $5.1
million and an increase of $1.6 million in accounts payable.

	   The cash flows used by investing activities were $2.9
million for the first nine months of fiscal 1999 as compared to
$1.8 million for the first nine months of fiscal 1998.  The cash
flows used by investing activities for the first nine months of
fiscal 1999 consist of $2.4 million in capital expenditures and a
reduction in capital expenditures payable of $.5 million.  The
cash flows used by investing activities for the first nine months
of fiscal 1998 consist of capital expenditures of $2.1 million
offset somewhat by an increase in capital expenditures payable of
$.3 million.

	   The cash flows used in financing activities were $45,000 for
the first nine months of fiscal 1999 as compared to cash flows
provided of $1.1 million for the first nine months of fiscal
1998. The cash flows used in financing activities for the first
nine months of fiscal 1999 reflect net advances of $.9 million on
the Company's line of credit which were used primarily for
capital expenditures as discussed above and $1.0 million used for
the purchase of treasury stock.  The cash flows provided from
financing activities for the first nine months of fiscal 1998
reflect net advances of $1.1 million on the Company's line of
credit, which were used primarily for capital expenditures.

	   Working capital at June 26, 1999 was $15.0 million as
compared to $14.2 million at June 27, 1998, and the current ratio
was 1.6 to 1.0 at the end of both periods.

	   The Company's primary ongoing cash requirements are for
current capital expenditures.  The two sources for the Company's
liquidity are internally generated funds and its bank credit
facility.  The Company has $12.3 million in borrowings
outstanding on its line of credit as of June 26, 1999.  The
Company believes that the unused portion of its $24.5 million
bank credit facility and internally generated funds will be
sufficient to fund its ongoing cash needs.

Year 2000 Compliance

	   The following Year 2000 discussion is provided in response
to the Securities and Exchange Commission's recent interpretative
statement expressing its view that public companies should
include detailed discussion of Year 2000 issues in their MD&A.

		The Company is currently assessing the issues confronting it
related to the "Year 2000 problem", which is the result of the
inability of many computer systems and electronic equipment to
distinguish the year 2000 from the year 1900.  The Company is
following an organized program to assure the Company's
information technology systems and related infrastructure will be
Year 2000 compliant.  The Company has divided its Year 2000
issues into three areas including:  computer hardware and
software business systems, manufacturing process control devices
and related systems, and facility support systems.  The Company's
Year 2000 program includes three phases:  (1) an audit and
assessment phase designed to identify Year 2000 issues; (2) a
modification phase designed to correct Year 2000 issues (this
phase includes testing of individual modifications as they are
installed); and (3)  a testing phase to test entire systems for
Year 2000 compliance after individual modifications have been
installed and tested.

		The Company has completed the audit and assessment phase for
all areas of its Year 2000 program. The Company has completed the
modification and testing phases for its computer hardware and
software business systems, and has substantially completed these
phases for the facility support systems and the manufacturing
process control devices and related systems. After all
modifications have been made, final testing of the system will
continue throughout 1999.

	  Management has estimated that the cost for correction of
Year 2000 issues, including any software and hardware changes and
the cost of personnel involved in working on the project, will be
approximately $260,000.  The Company estimates that 80% of the
total cost has been spent to date.  The Year 2000 updates are
being funded out of funds generated from operations and account
for less than 30% of the Company's information technology budget.

	  The Company's Year 2000 program includes investigation of
the Year 2000 readiness status of our major vendors and
customers.  The Company is using letters, questionnaires and
protocols to determine its vendors' and customers' Year 2000
readiness.  The Company has contacted all major vendors including
energy and scrap suppliers and external service providers
including banks, insurance companies, and phone service providers
to determine their Year 2000 status.  If any such vendor
indicates that they will not be Year 2000 compliant, the Company
will develop contingency plans to address the issue, which may
include identifying and developing other vendors.  The readiness
of these third parties will continue to be evaluated throughout
1999.

	  Although management does not believe that it will be
necessary, the Company has begun efforts to develop a contingency
plan in the event it experiences Year 2000 related problems.  The
plan will rely on manual processes and low technology to operate
the Company's facilities until the affected systems are repaired.

Outlook

		Management continues to believe that demand for our products
is strong in our major markets as exhibited by our current
bookings. Also, while the Company experienced price reductions in
the first half of fiscal 1999, current prices are stable in most
of our markets.

Quantitative and Qualitative Disclosure About Market Risk

	   Management does not believe that there is any material
market risk exposure with respect to derivative or other
financial instruments that would require disclosure under this
item.


Forward-Looking Statements

The matters discussed or incorporated by reference in this
Report on Form 10-Q that are forward-looking statements (as
defined in the Private Securities Litigation Reform Act of 1995)
involve risks and uncertainities.  These risks and uncertainities
include, but are not limited to, reliance on the truck and
utility vehicle industry; excess industry capacity; product
demand and industry pricing; volatility of raw material costs,
especially steel scrap; intense foreign and domestic competition;
management's estimate of niche market data; the cyclical and
capital intensive nature of the industry; and cost of compliance
with environmental regulations.  These risks and uncertainities
could cause actual results of the Company to differ materially
from those projected or implied by such forward-looking
statements.

<PAGE>

	PART II. - OTHER INFORMATION


ITEM 6.     Exhibits and Reports on Form 8-K

A)  Exhibits


			  3.1 	Certificate of Incorporation of Kentucky
Electric Steel, Inc., filed as Exhibit 3.1
to Registrant's Registration Statements on
Form S-1 (No. 33-67140), and incorporated
by reference herein.

				3.2 	By-Laws of Kentucky Electric Steel, Inc.,
filed as Exhibit 3.2 to Registrant's
Registration Statement on Form S-1 (No. 33-
67140), and incorporated by reference
herein.

               10.8 	The Kentucky Electric Steel, Inc. Salary
Continuation Plan, effective June 7, 1994,
for the benefit of the Company's eligible
salaried employees, as amended, filed
herewith.

               10.9	The Kentucky Electric Steel, Inc. Executive
Severance Plan, effective June 7, 1994, for
the benefit of the Company's eligible
Executive Officers, as amended, filed
herewith.

		      10.10	Employment agreements dated June 7, 1994,
between Kentucky Electric Steel, Inc. and
its four Executive Officers, as amended,
filed herewith.

			 10.18	The Kentucky Electric Steel, Inc. 1999
Share Plan for Non-Employee Directors dated
May 6, 1999, filed herewith.

			   27    Financial Data Schedule

		    B)  Reports on Form 8-K - None.
<PAGE>


SIGNATURES


     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.




DATED:  August 6, 1999          KENTUCKY ELECTRIC STEEL, INC.
                                        (Registrant)

                                    William J. Jessie
                              William J. Jessie, Vice President,
                                Secretary, Treasurer, and
                                Principal Financial Officer
<PAGE>