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            December 26, 1998              
 

	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 February 8, 1999, is as follows:

4,057,731 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 .............  9-12


   Item 3 - Qualitative and Quantitative Disclosures about
        Market Risk .....................................    12
 

PART II.    OTHER INFORMATION 

   Item 6 - Exhibits and Reports on Form 8-K ..................    13


            SIGNATURES  .......................................    14

<PAGE>
<TABLE>

KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
                                                          Dec. 26,     Sept. 26,
                       ASSETS                               1998          1998   
<S>                                                       <C>          <C> 
   CURRENT ASSETS
     Cash and cash equivalents                            $    134      $    150
     Accounts receivable, less allowance for doubtful
       accounts and claims of $440 at December 26, 1998
       and $460 at September 26, 1998                       12,004        12,037
     Inventories                                            20,281        20,363
     Operating supplies and other current assets             5,391         5,206
     Deferred tax assets                                       692           648
                                                           -------       ------- 
       Total current assets                                 38,502        38,404
                                                           -------       -------
   PROPERTY, PLANT AND EQUIPMENT
     Land and buildings                                      4,532         4,532
     Machinery and equipment                                42,006        42,004
     Construction in progress                                3,875         3,031
     Less - accumulated depreciation                       (15,632)      (14,772)
                                                           -------       ------- 
          Net property, plant and equipment                 34,781        34,795
                                                           -------       -------
   DEFERRED TAX ASSETS                                       6,100         5,990
                                                           -------       -------
   OTHER ASSETS                                              1,119         1,062
                                                           -------       -------
          Total assets                                    $ 80,502      $ 80,251

        LIABILITIES AND SHAREHOLDERS' EQUITY
   CURRENT LIABILITIES
     Advances on line of credit                           $ 13,227      $ 11,397
     Accounts payable                                        7,594         7,056
     Capital expenditures payable                              671           857
     Accrued liabilities                                     2,907         3,834
     Environmental liabilities                                 982           982
     Current portion of long-term debt                         125           125
                                                           -------       -------
          Total current liabilities                         25,506        24,251 
                                                           -------       ------- 


   LONG-TERM DEBT                                           20,000        20,000
                                                           -------       -------
   OTHER LIABILITIES                                           880           808
                                                           -------       -------
          Total liabilities                                 46,386        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, 4,990,312 and 4,985,937                        
       share issued, respectively                               50            50 
     Additional paid-in capital                             15,686        15,671
     Less treasury stock - 930,781 and 526,996    
       shares at cost, respectively                         (4,267)       (3,254)
     Deferred compensation                                     (63)          (73)
     Retained earnings                                      22,710        22,798
                                                           -------       -------
          Total shareholders' equity                        34,116        35,192
                                                           -------       -------
          Total liabilities and shareholders' equity      $ 80,502      $ 80,251
<FN>
See notes to condensed consolidated financial statement

</TABLE>
<TABLE>	
KENTUCKY ELECTRIC STEEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
(Unaudited)


                                                Three Months Ended       
                                             Dec. 26,        Dec. 27,
                                               1998            1997      
<S>                                          <C>             <C>         
              
NET SALES                                   $  25,624       $  26,020
COST OF GOODS SOLD                             23,549          23,680
                                              -------         -------



       Gross profit                             2,075           2,340 

SELLING AND ADMINISTRATIVE EXPENSES             1,689           1,688
                                              -------         ------- 

       Operating income                           386             652 

INTEREST INCOME AND OTHER                          25              10  
INTEREST EXPENSE                                 (553)           (595)
                                              -------         -------    

       Income (loss) before income taxes         (142)             67
                                
PROVISION (CREDIT) FOR INCOME TAXES               (54)             26 
                                              -------         -------

       Net income (loss)                     $    (88)       $     41 
                          
NET INCOME (LOSS) PER COMMON SHARE -
  BASIC AND DILUTED                          $   (.02)       $    .01

WEIGHTED AVERAGE SHARES OUTSTANDING - 
  BASIC                                     4,147,178       4,626,383

WEIGHTED AVERAGE SHARES OUTSTANDING - 
  DILUTED                                   4,147,178       4,643,073


<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)
           

                                                 Three Months Ended      
                                               Dec. 26,      Dec. 27,
                                                 1998          1997   
<S>                                            <C>           <C>
Cash Flows From Operating Activities:
  Net income (loss)                            $    (88)     $     41 
  Adjustments to reconcile net income 
    (loss) to net cash flows from 
    operating activities:
      Depreciation and amortization                 885           917
      Change in deferred taxes                     (110)          (13)
      Change in current assets and current
        liabilities:
          Accounts receivable                        33        (1,601)
          Inventories                                82        (2,948) 
          Operating supplies and other                             
            current assets                         (185)         (868)
          Deferred tax assets                       (44)           39
          Accounts payable                          538         2,137 
          Accrued liabilities                      (927)       (1,277)
                                                -------       -------
          Net cash flows from operating 
            activities                              184        (3,573)
                                                -------       -------
Cash Flows From Investing Activities:
  Capital expenditures                             (846)         (786)
  Change in capital expenditures payable           (186)          274 
                                                -------       -------
          Net cash flows from investing 
            activities                           (1,032)         (512)
                                                -------       -------
Cash Flows From Financing Activities:
  Net advances on line of credit                  1,830         4,095 
  Purchases of treasury stock                    (1,013)          (25)
  Issuance of common stock                           15            14
                                                -------       -------
          Net cash flows from financing 
            activities                              832         4,084
                                                -------       -------
          Net increase (decrease) in cash and             
            cash equivalents                        (16)           (1)

Cash and Cash Equivalents at Beginning of Period    150           127
                                                -------       -------
Cash and Cash Equivalents at End of Period     $    134      $    126

Interest Paid                                  $    937      $    957

Income Taxes Paid                              $    100      $    -   


<FN>
See notes to condensed consolidated financial statement

</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 period ended 
December 26, 1998, 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 December 26, 1998 and September 26, 1998 consist 
of the following ($000's): 
                                        Dec.  26,       Sept. 26, 
                                      1998           1998    
   Raw materials                        $  2,889        $  1,984
   Semi-finished and finished goods       17,392          18,379
   Total inventories                    $ 20,281        $ 20,363


(4)  Long-Term Debt

	The Company's bank credit facility was amended effective December 
19, 1997.  This amendment increased the bank credit facility from $17.5 
million to $24.5 million and extended the maturity date to January 31, 
2001.

(5)	Earnings Per Share

	Statement of Financial Accounting Standards No. 128 (SFAS No. 128) 
related to earnings per share (E.P.S) 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  
                                      December 26, 1998          December 27, 1997     
                                                      Per                         Per
                                    Net              Share      Net              Share 
                                  (Loss)   Shares    Amount   Income   Shares    Amount
<S>                               <C>      <C>       <C>      <C>      <C>       <C>
Basic Earnings Per Share
  Income (loss) available to 
    common stockholders            $(88)  4,147,178   $(.02) $    41   4,626,383  $ .01 
Effect of Dilutive Securities 
  Options                             -        -                 -        16,690 
Diluted Earnings Per Share
  Income (loss) available to
    common stockholders
    plus assumed conversions       $(88)  4,147,178   $(.02) $    41   4,643,073  $ .01
</TABLE>

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

                               December 26, 1998    December 27, 1997
	Transition stock options           91,106              147,184
	Employee stock options            386,668              315,976


(6)  Insurance Claim Receivable and 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 represents final payment due an 
environmental services company for treatment and disposal of the 
contaminated baghouse dust.  Payment for the disposal will occur within 
the next twelve months. Although it is possible that the ultimate 
disposal costs may change from current estimates, the effect of the 
change, if any, is not expected to be material to the financial 
statements due to the Company having applicable insurance coverage.


(7)  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 6.  However, discovery of unknown conditions 
could result in the recording of accruals in the periods in which they 
become known.



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 (1.5%) in the first 
quarter of fiscal 1999 to $25.6 million, as compared to $26.0 million for 
the first quarter of fiscal 1998. The decrease in net sales is primarily 
attributed to a 1.3% decrease in shipments.  

Cost of Goods Sold.  Cost of goods sold decreased $131,000 (.6%) in 
the first quarter of fiscal 1999 to $23.5 million, as compared to $23.7 
million for the first quarter of fiscal 1998.  As a percentage of net sales, 
cost of goods sold increased from 91.0% for the first quarter of fiscal 1998 
to 91.9% for the first quarter of fiscal 1999. The increase in cost of goods 
sold as a percentage of net sales reflects higher per ton conversion costs 
due to lower productivity and higher repair and maintenance expense, offset 
by lower scrap costs.  Production decreased due to equipment problems 
leading up to our scheduled maintenance outage in late December.

Gross Profit.  As a result of the above, the first quarter of fiscal 
1999 reflected a gross profit of $2.1 million as compared to a gross profit 
of $2.3 million for the first quarter of fiscal 1998.  As a percentage of 
net sales, gross profit decreased from 9.0% for the first quarter of fiscal 
1998 to 8.1% for the first quarter 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 for the first quarter of fiscal 1999 
were unchanged from the comparable period in fiscal 1998.  As a percentage 
of net sales, such expenses increased from 6.5% for the three months ended 
December 27, 1997 to 6.6% for the three months ended December 26, 1998.  The 
increase, as a percentage of sales, is the result of the decrease in net 
sales (as discussed above) for the quarter ended December 26, 1998. 

Operating Income. For the reasons described above, operating income 
decreased by $266,000 from an operating income of $652,000 in the first 
quarter of fiscal 1998 to an operating income of $386,000 in the first 
quarter of fiscal 1999. As a percentage of net sales, operating income 
decreased from 2.5% in the first quarter of 1998 to 1.5% in the first 
quarter of 1999.


Interest Expense.  Interest expense decreased by $42,000 for the three 
months ended December 26, 1998 from $595,000 for the first quarter of fiscal 
1998 to $553,000 for the first quarter of fiscal 1999.  The decrease in 
interest expense is due to a decrease in the average amount outstanding and 
a slight decline in the interest rate on the Company's line of credit during 
the first quarter of fiscal 1999 as compared to the first quarter of fiscal 
1998.

Net Income (Loss).  As a result of the above, net income decreased by 
$129,000 for the three months ended December 26, 1998 from net income of 
$41,000 for the first quarter of fiscal 1998 to a net loss of $88,000 for 
the first quarter of fiscal 1999.

Liquidity and Capital Resources.

	The cash flows provided by operating activities were $.2 million for 
the first quarter of fiscal 1999 as compared to cash flow used by operations 
of $3.6 million for the first quarter of fiscal 1998. First quarter of 
fiscal 1999 cash flows reflect the net loss of $88,000, $.9 million in 
depreciation and amortization, an increase of $.5 million in accounts 
payable and a $.9 million reduction in accrued liabilities.  The decrease 
in accrued liabilities is attributed to the payment of interest on long-term 
debt, the annual deposit of profit sharing and 401K matching funds with the 
trustee, and a reduction in the workers compensation accrual.  First quarter 
of fiscal 1998 operating cash flows reflect the increases in accounts 
receivable and inventories (due primarily to the increased level of sales 
and production) and the decrease in accrued liabilities, which were slightly 
offset by an increase in accounts payable.
                                                                         	
	The cash flows used by investing activities were $1.0 million for the 
first quarter of fiscal 1999 as compared to $.5 million for the first 
quarter of fiscal 1998. The cash flows used by investing activities consist 
of $.8 million in capital expenditures and a decrease in capital 
expenditures payable of $.2 million for the first fiscal quarter of 1999. 
The cash flows used by investing activities for the first quarter of fiscal 
1998 consist of capital expenditures of $.8 million offset somewhat by an 
increase in capital expenditures payable of $.3 million.

The cash flows provided from financing activities were $.8 million for 
the first quarter of fiscal 1999 as compared to $4.1 million for the first 
quarter of fiscal 1998. The cash flows provided from financing activities 
for the first quarter of fiscal 1999 reflect net advances of $1.8 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 quarter of fiscal 1998 reflect net advances of $4.1 million on the 
Company's line of credit which were used primarily for working capital needs 
and capital expenditures.


Working capital at December 26, 1998 was $13.0 million as compared to 
$14.2 million at September 26, 1998, and the current ratio was 1.5 to 1.0 
as compared to 1.6 to 1.0. 

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 
$13.2 million in borrowings outstanding on its line of credit as of December 
26, 1998.  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 include 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 the 
computer hardware and software business systems and the facility support 
systems.  The audit and assessment phase for the manufacturing process 
control devices and related systems is substantially completed and should 
be finalized by March 31, 1999.

	The Company has completed the modification phase for its computer 
hardware and software business systems and expects to conduct final testing 
of these systems in the first calendar quarter of 1999. Modifications and 
final testing of the facility support systems are expected to be completed 
by March 31, 1999.

	The Company currently expects to complete the modification phase for 
its manufacturing process control devices and related systems during the 
second calendar quarter of 1999. After all modifications have been made, 
appropriate testing of the system is expected to be performed prior to July 
31, 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 
$300,000.  The Company estimates that 40% 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' 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 compliance 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 Company has also contacted significant 
customers to determine their progress towards Year 2000 compliance and to 
identify issues, if any, which might develop if a customer is unable to 
become year 2000 compliant on a timely basis.  If any issues are identified, 
the Company expects to develop procedures to permit the Company to continue 
to supply the customer despite Year 2000 issues.

	The Company does not have a contingency plan to operate in the event 
that its business systems are not Year 2000 compliant.  As our work 
progresses, if the results of our testing suggest that there is a 
significant risk that the business systems might not be Year 2000 compliant, 
a contingency plan will be developed.





Outlook

	Management continues to see somewhat lower demand in the Company's 
major markets and downward pricing on many of our products.  However, the 
Company's current backlog and shipping levels are stable to increasing. 
During the scheduled major maintenance outage from December 23, 1998 through 
January 3, 1999, both furnaces were overhauled and several other capital and 
major maintenance projects were completed.  Management is optimistic that 
the benefits of these projects combined with continued stable to increasing 
shipment levels will help the Company minimize the effect of lower demand 
and declining prices.


Qualitative and Quantitative 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, the reliance 
on 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.

	Without limiting the foregoing, various statements in the previous 
discussion of Year 2000 are likewise forward-looking statements.  These 
statements include statements of the Company's expectations, statements with 
regard to schedules and expected completion dates and statements regarding 
expected Year 2000 compliance.  These forward-looking statements are subject 
to various risk factors which may materially affect the Company's efforts 
to achieve Year 2000 compliance.  These risk factors include the inability 
of the Company to complete the plans and modifications that it has 
identified, the failure of software vendors to deliver the upgrades and 
repairs to which they have committed, the wide variety of information 
technology systems and components, both hardware and software, that must be 
evaluated and the large number of vendors and customers with which the 
Company interacts.  The Company's assessments of the effects of Year 2000 
on the Company are based, in part, upon information received from third 
parties and the Company's reasonable reliance on that information. 
Therefore, the risk that inaccurate information is supplied by third parties 
upon which the Company reasonably relied must be considered as a risk factor 
that might affect the Company's Year 2000 efforts.  The Company is 
attempting to reduce the risks by utilizing an organized approach, extensive 
testing, and allowance of ample contingency time to address issues 
identified by tests.

<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 Statement on Form S-1 (No. 33-67410),
				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.

			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:  February 8, 1999                 KENTUCKY ELECTRIC STEEL, INC.  
                                                  (Registrant) 

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


<PAGE>