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                                                                     Exhibit 4.2


                       FIRST AMENDMENT TO CREDIT AGREEMENT
                       -----------------------------------


                  THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of January
24, 1997, (this "First Amendment"), is by and among OLYMPIC STEEL, INC., an Ohio
corporation ("Borrower"), and NATIONAL CITY BANK ("NCB") and the other Banks
signatory hereto or that become parties to the Credit Agreement hereafter
identified by amendment or supplement thereto ("Banks") and NATIONAL CITY BANK,
as agent for the Banks (in that capacity, "NCB-Agent").

                                    RECITALS
                                    --------

                  A. Borrower, the Banks and NCB-Agent have entered into a
Credit Agreement, dated as of October 4, 1996, pursuant to which Borrower may
obtain, among other things, (i) loans ratably from the Banks that are on a
revolving credit basis and (ii) subject LCs issued by NCB in which the Banks
agree to ratably share the obligations in respect thereof, in each case until
the expiration date.

                  B. Borrower and the Banks desire to amend the Credit Agreement
in order to increase the amount of the commitments by the Banks for subject
revolving credit loans and additional subject LCs by Ten Million Dollars
($10,000,000) and to permit Borrower to make certain joint venture investments
and guarantees of indebtedness of the joint venture entities.

                                    AGREEMENT
                                    ---------

                  Accordingly, the parties have agreed and do hereby agree as
follows:

         1. Subsection 2A.01 SUBJECT REVOLVING LOANS AND LETTERS OF CREDIT
AMOUNTS of the Credit Agreement shall be deleted in its entirety and the
following shall be substituted in place thereof:

                  2A.01 SUBJECT REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
         AMOUNTS -- The aggregate amount of the commitments by the Banks for
         subject revolving credit loans and additional subject LCs shall be
         Sixty Million Dollars ($60,000,000). The aggregate amount of the
         subject commitments for the subject revolving credit loans and
         additional subject LCs may be reduced from time to time pursuant to
         subsection 2A.03 and the subject commitments may be terminated pursuant
         to Section 5B. The aggregate amount of the subject commitments by the
         Banks for existing subject LCs as of January 24, 1997 is Nine Million,
         Eight Hundred Forty Thousand, Eight Hundred Thirty-Six Dollars
         ($9,840,836) but that amount may be reduced from time to time pursuant
         to subsection 2A.03 and the subject commitments may be terminated
         pursuant to section 5B. The amount of each Bank's subject commitment to
         make subject revolving credit loans to Borrower and to participate in
         respect of additional subject LCs and existing subject LCs (subject to
         such reduction or termination), and the proportion (expressed as a
         percentage) that it bears to all of the subject commitments, is set
         forth opposite the Bank's name on Schedule 2A.01 hereto dated January
         24, 1997.

         2. Notwithstanding the negative covenant limitations of Section 3D.01,
no event of default under the Agreement shall be deemed to have occurred by
reason of either of the following transactions for which this First Amendment
shall constitute a supplemental schedule.

         (i)      Borrower's equity investment, through its wholly-owned
                  subsidiary, Olympic Steel Trading, Inc., of sums not exceeding
                  $4,000,000 to obtain and maintain not


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                  less than a 45% membership interest in a joint venture entity,
                  Olympic Continental Resources, L.L.C., an Ohio limited
                  liability company, formed to engage in the business of buying,
                  selling and bidding for metals and alternative iron products,
                  the other members of such entity being Continental Resources
                  Limited Liability Company and Uwe T. Schmidt; and

         (ii)     Borrower's equity investment, through a wholly-owned
                  subsidiary, of sums not exceeding $2,000,000 to obtain and
                  maintain not less than a 50% membership interest in a joint
                  venture entity, OLP,LLC, a Michigan limited liability company
                  (dba Olympic Laser Processing), formed to conduct laser
                  welding operations with the other member being USX Corporation
                  or a subsidiary thereof.

         3. Notwithstanding the negative covenant limitation of subsection
3D.02, no event of default under the Agreement shall be deemed to have occurred
by reason of either of the following transactions:

         (i)      Borrower's guaranty of payment of indebtedness of Olympic
                  Continental Resources, L.L.C. to National City Commercial
                  Finance, Inc. and Mellon Bank, N.A. in an amount not exceeding
                  $10,000,000.00, plus interest and costs of collection.

         (ii)     Borrower's guaranty of payment of indebtedness of OLP,LLC in
                  an amount not greater than fifty percent (50%) of such
                  indebtedness with the amount guaranteed by Borrower in no
                  event exceeding $10,000,000.00, plus interest and costs of
                  collection.

         4. Contemporaneously with Borrower's execution of this First Amendment,
Borrower shall execute and deliver to each Bank a subject note in principal
amount equal to the dollar amount of such bank's aggregate subject commitment
therefor in Section 2A.01.

         5. Borrower restates and reaffirms all of its representations and
warranties set forth in Section 4B of the Credit Agreement as of the date
hereof.

         6. This First Amendment and the modifications set forth herein shall be
and become effective as of the date hereof.

         7. This First Amendment may be executed in one or more counterparts,
each counterpart to be executed by Borrower, by NCB-Agent and by one or more or
all of the Banks. Each such executed counterpart shall be deemed to be an
executed original for all purposes but all such counterparts taken together
shall constitute one agreement, which agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof.


         8. This First Amendment hereby may be executed by representatives of
the Banks using facsimile signatures and facsimiled signature pages shall in all
respects be binding on all parties hereto and thereto as if such signature pages
were originally delivered. Original signature pages for all facsimiled signature
pages shall be delivered to the parties hereto not later than January 31, 1997.


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         IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the date first above written.

NATIONAL CITY BANK, AGENT                     OLYMPIC STEEL, INC.


By: /s/ Donald B. Hayes, Jr.                  By: /s/ Richard T. Marabito
   ------------------------------                -------------------------------
     Donald B. Hayes, Jr.                           Richard T. Marabito
     Vice President                                 Treasurer


NATIONAL CITY BANK


By: /s/ Donald B. Hayes, Jr. 
   ------------------------------            
      Donald B. Hayes, Jr.
      Vice President


COMERICA BANK                                 MELLON BANK, N.A.


By: /s/ Brian T. Dragon                       By: /s/ Michael C. Haines
   ------------------------------                -------------------------------
     Brian T. Dragon                                Michael C. Haines
     Account Officer                                Officer


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