SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12

Bayou Steel Corporation
(Name of Registrant as Specified In Its Charter)

Board of Directors of Bayou Steel Corporation
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1. Title of each class of securities to which transaction applies:

2. Aggregate number of securities to which transaction applies:

3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:

4. Proposed maximum aggregate value of transaction:

5. Total fee paid:

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1. Amount Previously Paid:
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4. Date Filed:

[LOGO]
BAYOU STEEL CORPORATION

NOTICE OF
ANNUAL MEETING OF
CLASS A, CLASS B AND
CLASS C COMMON
STOCKHOLDERS AND
PROXY STATEMENT

January 20, 1998

Dear Stockholders:

You are cordially invited to attend the Bayou Steel Corporation Annual
Meeting of Stockholders to be held at 9:00 a.m. (E.S.T.) on Wednesday, February
25, 1998, at One West 54th Street, New York, NY 10019.

The attached Notice of Annual Meeting of Stockholders and the accompanying
Proxy Statement describe in detail the matters proposed by your Board of
Directors to be considered and voted upon at the meeting.

It is important that your shares be represented at the meeting, whether or
not you are personally able to attend. Accordingly, you are requested to sign,
date and return the enclosed proxy promptly. Your cooperation is appreciated. If
you do attend the Annual Meeting, you may still vote in person.

Sincerely,

HOWARD M. MEYERS,
CHAIRMAN AND CHIEF
EXECUTIVE OFFICER

BAYOU STEEL CORPORATION
138 HIGHWAY 3217
P. O. BOX 5000
LAPLACE, LOUISIANA 70069-1156

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

CLASS A COMMON, CLASS B COMMON, AND CLASS C COMMON

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Bayou Steel Corporation (the "Company"), will be held at 9:00 a.m.
(E.S.T.) on Wednesday, February 25, 1998, at One West 54th Street, New York, New
York 10019, for the purpose of considering and voting upon the following matters
as set forth in the accompanying Proxy Statement:

1. Election of three (3) Class A and four (4) Class B Directors.

2. Ratification of the appointment of Arthur Andersen LLP as auditors of
the Company for the fiscal year ending September 30, 1998.

Only stockholders of record at the close of business on January 5, 1998,
are entitled to notice of and to vote at the Meeting. A certified list of
stockholders entitled to vote at the Meeting will be available for examination,
during business hours, by any stockholder for any purpose germane to the Meeting
for a period of not less than ten days immediately preceding the Meeting at the
offices of American Stock Transfer and Trust Company, 6201 15th Avenue,
Brooklyn, New York 11219.

PLEASE SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR EARLIEST CONVENIENCE
IN THE ACCOMPANYING ENVELOPE. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON.

By order of the Board of Directors

RICHARD J. GONZALEZ,
SECRETARY

January 20, 1998

BAYOU STEEL CORPORATION
138 HIGHWAY 3217
P.O. BOX 5000
LAPLACE, LOUISIANA 70069-1156

PROXY STATEMENT

SOLICITATION, QUORUM, AND VOTING OF PROXIES

This Proxy Statement, which will be first mailed to stockholders on or
about January 20, 1998, is furnished in connection with the Board of Directors'
solicitation of proxies from the holders of the Class A Common Stock of the
Company at the Annual Meeting of Stockholders of the Company to be held February
25, 1998 (the "Meeting") at the time and place set forth in the accompanying
Notice.

The cost of preparing and mailing this Proxy Statement and the accompanying
proxy, and the cost of solicitation of proxies on behalf of the Board of
Directors, will be borne by the Company. Solicitation will be made by mail. Some
personal solicitation may be made by directors, officers, and employees without
special compensation, other than reimbursement for expenses.

The Board of Directors has fixed the close of business on January 5, 1998,
as the record date for the Meeting and only holders of record of the Class A,
Class B, and Class C Common Stock on the record date are entitled to receive
notice of and to vote at the Meeting. The holders of a majority of the issued
and outstanding shares of Class A, Class B, and Class C Common Stock present in
person, or represented by proxy, shall constitute a quorum at the Meeting.

Stockholders who submit a properly executed proxy voting, or abstaining
from voting, on any issue will be counted as present for purposes of
constituting a quorum. If a quorum is present: (A) the holders of the Class A
Common Stock are entitled to elect 40% of the entire board of directors, and the
holders of the Class B Common Stock are entitled to elect 60% of the entire
board of directors, in each case with the election of directors being determined
by plurality vote and (B) the affirmative vote of a majority of the Class A,
Class B, and Class C Common Stock present or represented by proxy and entitled
to vote is required to ratify the appointment of independent auditors.

Abstentions will have the effect of a vote against the proposal to ratify
the appointment of auditors.

If brokers who do not receive instructions from beneficial owners as to the
granting or withholding of proxies may not or do not exercise discretionary
power to grant a proxy with respect to such shares (a "broker non-vote") on a
proposal other than the election of directors, shares not voted on such proposal
as a result will be counted as not present with respect to the proposal. Because
the proposal to ratify the appointment of auditors must be approved by the
affirmative vote of a majority of the voting power present at the Meeting, the
failure to deliver a proxy to vote on that proposal will have no effect on the
outcome of the vote.

With respect to the proposal to ratify the appointment of auditors and with
respect to any other matter to be voted upon at the Annual Meeting as to which
the Class A, Class B, and Class C Common Stock will vote together as a single
class, each share of Class A and Class C Common Stock is entitled to one vote
and each share of Class B Common Stock is entitled to 7.0097665 votes.

All proxies received by the Company in the form enclosed will be voted as
specified and if no contrary specification is made, the proxy will be voted FOR
the election of the Class A Directors set forth in this Proxy Statement and FOR
the ratification of the appointment of Arthur Andersen LLP as auditors.

REVOCATION

A proxy may be revoked any time prior to its exercise by written notice of
revocation to the Secretary of the Company or by duly executing a proxy bearing
a later date. A stockholder who votes in person at the Meeting in a manner
inconsistent with a proxy previously filed on the stockholder's behalf will be
deemed to have revoked such proxy as it relates to the matter voted upon in
person.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

On October 31, 1997, the Company had outstanding 10,613,380 shares of Class
A Common Stock ($.01 par value), 2,271,127 shares of Class B Common Stock ($.01
par value), and 100 shares of Class C Common Stock ($.01 par value).

The following table lists persons other than executive officers or
directors of the Company who are known to the Company to own beneficially more
than 5% of each class of its outstanding stock as of October 31, 1997. The
information set forth below is based upon information furnished by the persons
listed. Unless otherwise indicated, all shares shown as beneficially owned are
held with sole voting and investment power.

TITLE BENEFICIAL OWNERSHIP
OF ----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER CLASS AMOUNT PERCENTAGE
- ------------------------------------ ----- ------ ----------
How & Company................................. A 540,300(1) 5.09%
c/o The Northern Trust Co.
P.O. Box 92303
Chicago, IL 60675

Bayou Steel Properties Limited(2)............. B 2,271,127(1) 100.00%
2777 Stemmons Freeway
Dallas, TX 75207

Voest-Alpine International Corporation........ C 100(1) 100.00%
- ------------
(1) As of October 31, 1997
(2) See footnote 7 on page 5.

ELECTION OF DIRECTORS (PROPOSAL 1)

NOMINEE DIRECTORS

The Company's Certificate of Incorporation states that the number of
directors shall be between seven and thirteen, with the exact number to be set
by the Board of Directors. The Board of Directors has currently set the number
of directors at seven, of which three may be elected by the Class A Stockholders
and four may be elected by the Class B Stockholders. Each of the Class A
Director nominees, who is currently a member of the Board of Directors, has been
nominated for re-election by the Nominating Committee of the Board of Directors
for a one-year term expiring at the next Meeting of Stockholders and until their
successors have been elected. Unless authority to vote is specifically withheld
by appropriate designation on the proxy, it is the intention of the persons
named in the accompanying proxy to vote the Class A shares represented thereby
in favor of the reelection of Messrs. Lawrence E. Golub, Jeffrey P. Sangalis,
and Stanley S. Shuman, the three nominees named below, as Class A Directors of
the Company.

The Company has been advised by Bayou Steel Properties Limited (the
"BSPL"), the holder of all of the Company's Class B shares, that it is the
intention of such holder to vote all of its Class B shares in favor of the
reelection of Messrs. Melvyn N. Klein, Albert P. Lospinoso, Howard M. Meyers and
Jerry M. Pitts, the four nominees named below, as Class B Directors of the
Company. Although no such intention currently exists, the holder of the Class B
Common Stock may determine to elect as directors persons other than those
currently named as nominees.

THE BOARD OF DIRECTORS RECOMMENDS THAT CLASS A STOCKHOLDERS VOTE FOR EACH
OF THE CLASS A DIRECTOR NOMINEES NAMED BELOW, AND, UNLESS A STOCKHOLDER GIVES
INSTRUCTIONS ON THE PROXY CARD TO THE CONTRARY, THE PROXIES NAMED THEREON INTEND
TO SO VOTE. MANAGEMENT DOES NOT ANTICIPATE THAT ANY OF THE NOMINEES FOR CLASS A
DIRECTOR WILL BE UNABLE TO SERVE, BUT IF SUCH A SITUATION SHOULD ARISE, IT IS
THE INTENTION OF THE PERSONS NAMED IN THE ACCOMPANYING PROXY TO VOTE FOR THE
ELECTION OF SUCH OTHER PERSON OR PERSONS AS THE NOMINATING COMMITTEE OF THE
BOARD OF DIRECTORS MAY RECOMMEND.

INFORMATION WITH RESPECT TO BOARD OF DIRECTORS

The following table sets forth certain information as to the Director
nominees (and as to the ownership of the Company's Class A and Class B Common
Stock by Directors, named Executive Officers, and all Executive Officers and
Directors of the Company, as a group) as of October 31, 1997. Unless otherwise
indicated, each of the directors has held the positions listed for at least five
years.

COMMON STOCK
-------------------------------------------------------------------
CLASS A CLASS B
------------------------------- --------------------------------
NUMBER OF SHARES PERCENT NUMBER OF SHARES PERCENT
NAME, AGE AND DIRECTOR BENEFICIALLY OUTSTANDING & BENEFICIALLY OUTSTANDING &
PRINCIPAL OCCUPATION SINCE OWNED EXERCISABLE OWNED EXERCISABLE
-------------------- ----- ----- ----------- ----- -----------
CLASS A DIRECTOR NOMINEES

Lawrence E. Golub, 38 (1) 1988 103,000 * -0- -0-
President of Golub Associates, Inc.,
Equity Investment firm
New York, New York
Jeffrey P. Sangalis, 39 (2) 1995 822,422 7.19 -0- -0-
Managing Partner & Director of
Rice Sangalis Toole & Wilson
Investment Firm
Houston, Texas
Stanley S. Shuman, 62 (3)(7) 1988 817,880 7.71 -0- -0-
Executive Vice President & Managing
Director of Allen & Company
Incorporated, investment bankers
New York, New York

CLASS B DIRECTOR NOMINEES

Melvyn N. Klein, 55 (4)(7) 1988 60,000 * -0- -0-
President, JAKK Holding Corporation,
a General Partner of GKH Partners, L.P.
Corpus Christi, Texas
Albert P. Lospinoso, 61 (5)(7) 1988 10,000 * -0- -0-
Director of Quexco Inc., a holding company
involved in recycling nonferous metals
Dallas, Texas
Howard M. Meyers, 55 (6)(7) 1988 300,000 2.83 2,271,127 100
Chairman and Chief Executive Officer
of the Company
Jerry M. Pitts, 46 (8) 1994 24,150 * -0- -0-
President and Chief Operating Officer
of the Company

Richard J. Gonzalez, 50 -- 13,031(9) * -0- -0-
Vice President, Chief Financial
Officer, Treasurer and Secretary
Timothy R. Postlewait, 47 -- 12,165(9) * -0- -0-
Vice President of Plant Operations
Rodger A. Malehorn, 55 -- 11,422(9) * -0- -0-
Vice President of Commercial Operations
All directors and executive officers as
a group (10) (11 persons) 2,180,620 18.98 2,271,127 100

- -----------------
* Less than one percent.

(1) Mr. Lawrence E. Golub has been President of Golub Associates, Inc., an
equity investment firm, since August 1994. From September 1993 to August
1994, Mr. Golub was a Managing Director of Bankers Trust Company in New
York, New York. From September 1992 to August 1993, Mr. Golub was a
White House Fellow. Mr. Golub was Managing Director of Wasserstein
Perella Capital Markets from February 1990 to August 1992 and an officer
of Allen & Company Incorporated, an investment banking firm, from 1984
to February 1990. He is Chairman of Mosholu Preservation Corporation.
From February 21, 1991 until September 21, 1994, Mr. Golub served as a
Director elected by the Class B Common stockholder.

(2) All 822,422 shares are subject to a warrant beneficially owned by Rice
Partners II, LP. Mr. Sangalis is a Partner and Director of Rice Sangalis
Toole & Wilson, Vice President and Managing Director of Rice Partners
II, LP and RSTW Partners III, L.P., and Chairman and Director of Jotan,
Inc. Mr. Sangalis disclaims beneficial ownership of such shares. In
addition, Rice Partners II, LP owns Preferred Stock of the Company
pursuant to a Preferred Stock and Warrant Purchase Agreement, dated June
13, 1995, which among other things, allows the holder to designate a
director to the Company's Board.

(3) Includes 522,528 shares of Class A Common Stock owned by Allen & Company
Holding, Inc., which owns all of the outstanding shares of Allen &
Company Incorporated; Mr. Stanley S. Shuman is an Executive Vice
President and Managing Director of both Allen & Company Holding, Inc.
and Allen & Company Incorporated. Mr. Shuman disclaims beneficial
ownership of such shares. Includes an aggregate of 60,000 shares of
Class A Common Stock owned by trusts for the benefit of Mr. Shuman's
children, of which Mr. Shuman disclaims beneficial ownership. Mr. Shuman
has no voting or investment power, shared or otherwise, in the foregoing
shares. He is a Director of The News Corporation Limited, Hudson General
Corporation, Global Asset Management, U.S.A., Sesac Inc., Tower Air
Inc., and Vulcano Entertainment, LLC.

(4) Mr. Melvyn N. Klein has been a practicing attorney and a private
investor in Corpus Christi, Texas. He has been a Director of Quexco
since 1984. He is the sole shareholder, sole director and President of
JAKK Holding Corporation, a General Partner of GKH Partners, L.P., which
is the sole General Partner of GKH Investments, L.P., an investment
fund; founder and principal of Questor Partners Fund, L.P.; and a
director of Anixter International, Inc., Santa Fe Energy Resources, and
Hanover Compressor Company.

(5) Mr. Albert P. Lospinoso was Chairman of the Board of RSR Corporation
("RSR") a privately owned, nonferrous metals recycle smelting and
refining company with offices in Dallas, Texas, and plants in Dallas,
Texas; Middletown, New York; Indianapolis, Indiana; and City of
Industry, California from May 1996 to March 1997. He was Chief Executive
Officer, President, and director of RSR Corporation until

May 1996. From July 1992 until July 1995, Mr. Lospinoso was President
and Chief Operating Officer of RSR, and for more than five years prior
to that he was the Executive Vice President, Chief Operating Officer and
a director of RSR and its predecessor companies. Since 1984, Mr.
Lospinoso has been a director of Quexco Incorporated.

(6) Mr. Howard M. Meyers has been Director, Chairman of the Board, Chief
Executive Officer of the Company since September 5, 1986, and was also
President until September 21, 1994. Since 1984, he has been Director,
Chairman of the Board, Chief Executive Officer and President of Quexco
Incorporated, a privately owned company.

(7) All 300,000 shares of Class A Common Stock are owned by a limited
partnership in which Mr. Meyers and his wife are the sole limited
partners and of which the general partner is a corporation all of the
stock of which is owned by Mr. Meyers. Through his control of the
corporate general partner of the limited partnership, Mr. Meyers has
sole voting and dispositive power over the 300,000 shares of Class A
Common Stock. The limited partnership also owns 60% of the Common Stock
of Bayou Steel Properties Limited (the "BSPL"), a Delaware corporation.
Through his control of the corporate general partner of the limited
partnership, Mr. Meyers controls BSPL's voting power. Since BSPL owns
100% of the Company's Class B Common Stock, Mr. Meyers has sole voting
and dispositive control of the Class B Common Stock. The Class B Common
Stock accounts for a maximum of 60% of the voting power of the Company.
Therefore Mr. Meyers may be deemed to "control" the Company. Allen &
Company Incorporated and Messrs. Klein, Lospinoso, and Shuman are
minority stockholders of BSPL owning 2.08%, 2.77%, 0.76%, and 1.17%,
respectively, and Messrs. Lospinoso and Meyers are directors of BSPL.

(8) Includes exercisable options for 18,000 shares of Class A Common Stock.
Mr. Jerry M. Pitts was elected Director, President and Chief Operating
Officer on September 21, 1994. He was elected Executive Vice President
and Chief Operating Officer of the Company on June 7, 1991. He had been
Executive General Manager of the Company since July 1, 1987. From 1986
to 1987, he served the Company as General Manager of Operations; from
1984 to 1986, he was Superintendent of Melting Operations; and from 1980
to 1984, he was General Foreman of Melting. Mr. Pitts worked in various
management capacities related to production and process engineering at
U.S. Steel Corporation from 1974 to 1980.

(9) Includes exercisable options for 9,000 shares of Class A Common Stock
for each of Messrs. Gonzalez, Postlewait, and Malehorn.

(10) Includes 873,422 shares of Class A Common Stock, subject to exercisable
warrants, and stock options held by such persons.

During the fiscal year ended September 30, 1997, the Company's Board of
Directors held four regular meetings and three special meetings. Each member of
the Board of Directors, except Mr. Klein (who attended 64%), attended at least
75% of the meetings of the Board and of each Board committee of which they were
members.

AGREEMENT CONCERNING CHANGE IN CONTROL

The shares of common stock of BSPL owned by Mr. Howard M. Meyers may not be
sold, nor may shares of BSPL be issued, at a price which represents a premium
attributable to the underlying Class B Common Stock over the market price of the
Class A Common Stock, to any person or group if such sale, when aggregated with
all prior sales during the immediately preceding four-year period, would result
in such person or group owning more than 50% of the common stock of BSPL, unless
such person or group agrees to make a tender offer within 30 days for an
equivalent percentage of Class A Common Stock at the highest price paid by such
person or group (expressed in equivalent shares of Class B Common Stock) for the
shares of common stock of BSPL; provided that the Directors elected by the
holders of the Class A Common Stock waive the charter restriction prohibiting a
purchaser from acquiring 5% or more of the aggregate fair market value of the
Class A Common Stock. The agreement terminates when the holders of the Class B
Common Stock no longer have the right to elect a majority of the Board of
Directors of the Company.

The Company's Certificate of Incorporation provides that if Mr. Meyers
resigns, retires or is removed for cause as Chief Executive Officer of the
Company, the Class B Common Stock will no longer vote separately by class with
respect to the election of directors, and will only have one vote per share.

COMMITTEES OF THE BOARD

The Board of Directors has four committees, an Audit Committee, an
Environmental, Health,and Safety Audit Committee, a Compensation Committee, and
a Nominating Committee. During the fiscal year ended September 30, 1997, the
Audit Committee met twice, the Environmental, Health, and Safety Audit Committee
twice, the Nominating Committee once, and the Compensation Committee three
times.

THE AUDIT COMMITTEE presently consists of Messrs. Klein (Chairman),
Lospinoso, Golub, and Sangalis. The Audit Committee is charged with the duties
of making recommendations to the Board of Directors regarding the selection of
the Company's independent auditors, reviewing the activities of such independent
auditors and of any internal audit activities of the Company, disposing and
deciding of major accounting policy matters directly or indirectly affecting the
Company, defining the scope of the annual audit of the Company, and such other
powers and duties as may be delegated to such committee by the Board of
Directors from time to time.

ENVIRONMENTAL, HEALTH, AND SAFETY AUDIT COMMITTEE, which presently consists
of Messrs. Golub (Chairman), Klein, Lospinoso, and Shuman, is charged with
oversight of the Company's Health and Safety Policy and its Environmental
Compliance Policy, reviewing the independent audit reports of the outside
health, safety and environmental consultants engaged for such purposes, defining
the scope of such audits and such other powers and duties in the health, safety
and environmental areas as may be delegated to the Committee by the Board of
Directors.

THE COMPENSATION COMMITTEE presently consists of Messrs. Shuman (Chairman),
Golub, and Lospinoso. The Compensation Committee is empowered to establish
compensation payable to directors and executive officers of the Company, as well
as any loans or advances by the Company to such persons, subject to the
provision that the Chief Executive Officer's compensation is controlled by an
employment arrangement between the Chief Executive Officer and the Company.

THE NOMINATING COMMITTEE presently consists of Messrs. Shuman (Chairman),
Golub, and Sangalis. The Nominating Committee is empowered to nominate persons
solely for election as Class A Directors at the annual meeting of stockholders.
The Committee will consider candidates for nominees for directors recommended by
Class A stockholders if such recommendations are submitted in writing to the
Secretary of the Company giving the background and qualifications of the
candidate.

DIRECTOR'S COMPENSATION

The Company pays each non-employee director $30,000 per year, payable in
quarterly installments, for serving as a director, plus expenses for each
meeting of the Board of Directors or a Committee of the Board that a director
attends. The Company does not compensate directors who are officers of the
Company for services as directors. Mr. Meyers and Mr. Pitts are the only
directors who are officers of the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and 10% shareholders to file with the Securities
and Exchange Commission reports of beneficial ownership, and changes in
beneficial ownership of the Common Stock of the Company. Jerry Pitts did not
file a timely Statement of Changes in Beneficial Ownership (Form 4) to report a
transaction in May 1997, and reported this transaction on Form 4 in July 1997.

EXECUTIVE COMPENSATION

The following table sets forth the compensation earned by the Company's
Chief Executive Officer and the four other most highly-compensated executive
officers for the fiscal years 1995 through 1997.

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARD OF
NAME AND ------------------- STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (# OF SHARES COMPENSATION(1)
------------------ ---- ------ ----- -------------- --------------

Howard M. Meyers....................1997 $502,488 $ -0- -0- $ -0-
Chairman and Chief 1996 474,675 -0- -0- -0-
Executive Officer 1995 465,504 -0- -0- -0-
Jerry M. Pitts......................1997 300,000 -0- -0- 2,549
President and Chief 1996 225,000 -0- -0- 2,477
Operating Officer 1995 225,000 112,500 -0- 1,538
Timothy R. Postlewait...............1997 166,000 -0- -0- 2,249
Vice President 1996 150,000 -0- -0- 2,062
of Plant Operations 1995 150,000 63,974 -0- 1,508
Richard J. Gonzalez.................1997 157,000 -0- -0- 2,049
Vice President, Chief Financial 1996 147,000 -0- -0- 1,855
Officer, Treasurer and Secretary 1995 147,000 77,910 -0- 1,489
Rodger A. Malehorn..................1997 150,000 -0- -0- 1,751
Vice President of 1996 132,000 -0- -0- 1,636
Commercial Operations 1995 132,000 60,065 -0- 1,457

- -------------------
(1) Includes amounts contributed by the Company to a 401(k) Plan for
matching contributions. For fiscal 1997, the Company's contributions
were $2,375 for Mr. Pitts, $2,075 for Mr. Postlewait, $1,875 for Mr.
Gonzalez, and $1,463 for Mr. Malehorn. Also includes the dollar value of
term life insurance premiums paid by the Company for the benefit of
these officers.

OPTION YEAR-END VALUE TABLE

The following table presents the value of unexercised options at September
30, 1997.

FISCAL YEAR-END OPTION VALUES

NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997(1)
EXERCISABLE(E)/ EXERCISABLE(E)/
NAME UNEXERCISABLE(U) UNEXERCISABLE(U)
---- ---------------- ----------------
Howard M. Meyers.............. -0- $ N/A
Jerry M. Pitts................ 18,000E/12,000U 9,000E/6,000U
Timothy R. Postlewait......... 9,000E/6,000U 4,500E/3,000U
Richard J. Gonzalez........... 9,000E/6,000U 4,500E/3,000U
Rodger A. Malehorn............ 9,000E/6,000U 4,500E/3,000U
- ------------
(1) At September 30, 1997, the closing sales price for Bayou Steel
Corporation's Class A Common Stock on the American Stock Exchange was
$4.875.

EMPLOYMENT CONTRACT

Pursuant to agreements between Mr. Howard M. Meyers and the Company, Mr.
Meyers is entitled to an annual cash salary equal to the greater of (x) a base
amount of $350,000 adjusted for increases in the consumer price index since
December 1985 or (y) 2% of the Company's pretax net income earned during the
immediately preceding year (or 1% if Mr. Meyers is no longer both the Chairman
and Chief Executive Officer of the Company with substantial day-to-day
managerial responsibilities).

RETIREMENT PLAN

The following table specifies the estimated annual benefits upon retirement
under the Bayou Steel Corporation Retirement Plan (the "Retirement Plan") to
eligible employees of the Company of various levels of average annual
compensation and for the years of service classifications specified:

PENSION PLAN TABLE

YEARS OF SERVICE
AVERAGE ANNUAL --------------------------------------------------
COMPENSATION 10 20 30 45
-------------- -------- -------- -------- --------
$ 20,000 $ 1,200 $ 2,400 $ 3,600 $ 3,600
50,000 4,035 8,070 12,105 12,105
100,000 9,535 19,070 28,605 28,605
150,000 15,035 30,070 45,105 45,105
200,000 16,135 32,270 48,405 48,405
250,000 16,135 32,270 48,405 48,405
300,000 16,135 32,270 48,405 48,405
600,000 16,135 32,270 48,405 48,405

The Company has adopted the Retirement Plan covering eligible employees of
the Company not covered by a collective bargaining agreement. Under the terms of
the Retirement Plan, the monthly retirement benefits of a participant payable at
the participant's normal retirement date are equal to (i) .6% of average monthly
compensation, multiplied by years of credited service (not to exceed 30 years),
plus (ii) .5% of that portion, if any, of average monthly compensation which is
in excess of the participant's average social security taxable wage base,
multiplied by years of credited service (not to exceed 30 years).

Annual retirement benefits are computed on a straight life annuity basis
without deduction for Social Security or other benefits. The Tax Code limits the
amount of annual compensation that may be counted for the purpose of calculating
pension benefits, as well as the annual pension benefits that may be paid, under
the Retirement Plan. For 1997, these amounts are $160,000 and $125,000,
respectively.

Earnings of the named executive officers, for purposes of calculating
pension benefits, approximate the aggregate amounts shown in the Annual
Compensation columns of the Summary Compensation Table, except for Messrs.
Meyers, Pitts, and Postlewait whose earnings for purposes of such calculation
are subject to the $160,000 limitation discussed above.

The years of credited service under the Retirement Plan as of October 1,
1997 for each of the five most highly compensated officers of the Company are:
Howard M. Meyers, 11 years; Jerry M. Pitts, 16 years; Timothy R. Postlewait, 16
years; Richard J. Gonzalez, 14 years; and Rodger A. Malehorn, 13 years.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Company's Compensation Committee are Messrs. Stanley S.
Shuman, Lawrence E. Golub, and Albert P. Lospinoso. No member of the
Compensation Committee has been an officer or employee of the Company. No
executive officer of the Company served in the last fiscal year as a director or
member of the compensation committee of another entity, one of whose executive
officers served as a director or on the Compensation Committee of the Company.

REPORT OF THE COMPENSATION COMMITTEE

THIS REPORT BY THE COMPENSATION COMMITTEE SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT WHICH INCORPORATES THIS PROXY
STATEMENT BY REFERENCE INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, (THE "ACTS"), AND THEY SHALL NOT
OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Company's executive compensation program is designed to attract,
retain, reward, and motivate executive management talent required to achieve its
short and long-term business objectives, maintain its competitive position in
the steel minimill industry, and increase shareholder value. This program is
administered and effected by the Company's management and monitored by the
Compensation Committee of the Board of Directors which is comprised of outside
directors of the Company.

GENERAL. In fiscal 1996, the Company engaged an independent compensation
consultant to review the competitiveness of its total executive compensation
package. Total compensation includes base pay, annual incentive pay, and
long-term incentives. The consultant, with management participation, selected a
peer group of 14 public steel minimills, and reviewed compensation of comparable
executive positions in the peer group over a three year period. Adjusting for
market capitalization, assets, and sales, the consultant determined a target
level of total compensation for each of the Company's executive officers. The
report of the independent consultant, which was presented to the Compensation
Committee and subsequently accepted by the Board of Directors, made
recommendations intended to maintain total executive compensation at a
competitive level. The Compensation Committee has basically used this approach
as the compensation policy since 1994, although certain subjective elements,
including individual performance, scope of responsibilities, and unusual
activities, such as acquisitions and financing transactions, are also
considered.

BASE PAY. Salaries of the Company's executive officers, other than the
Chief Executive Officer, are determined by the Chief Executive Officer within
the general compensation guidelines developed by the independent consultant and
adopted by the Committee. Based on the study of the peer group of steel
minimills, base salaries are targeted at the median level of salaries in the
peer group adjusted for sales, assets, and market capitalization. Besides
maintaining competitive market levels, subjective criteria, such as the impact
the executive has on the Company, the skills and experience required by the job,
individual performance, and internal equity are considered in determining salary
levels.

ANNUAL INCENTIVE PAY. A significant portion of the potential compensation
of the Company's executive officers consists of an annual incentive cash bonus.
The Committee believes that incentive compensation provides the best means of
motivating and rewarding performance while providing necessary controls on cost.
The Company has instituted an Incentive Compensation Plan (the "ICP") to provide
annual cash incentives for the attainment of corporate financial objectives to
all executive officers, except Mr. Meyers. The Administrative Committee,
composed of one or all of the Company's officers, including Howard M. Meyers, as
appointed by the Compensation Committee, determines quantitative measures of
performance relating to financial or other indicators of performance for the
Company and measurable individual goals each year. The Administrative Committee
reviewed these measures with a subcommittee of the Board as to appropriateness.
In fiscal 1997, the ability of the Company's executive officers to earn
incentive bonuses under the ICP was dependent upon the Company's achievement of
certain levels of return on assets (the "ROA") percentage (income, before
interest, tax, depreciation, and amortization to defined assets), using the
historical ROA experience of a group of peer competitors. If the threshold level
below which no incentives would be paid is exceeded, the cash incentive bonuses
incrementally increase based upon specified ROA levels pre-established by the
Administrative Committee. Additionally, for certain executives, other specific
goals, such as shipments, cost reduction, environment, and safety, were
established. Since the threshold level for ROA percentage was reached for
certain officers, some awards were paid under the ICP for fiscal 1997.

LONG-TERM INCENTIVES. The purposes of long-term incentive compensation is
to promote the Company's long-term goals by providing financial incentives to
executives to increase the value of the Company, as reflected in the price of
its stock, and to focus on the intermediate and long-term development and
prosperity

of the Company. By providing the opportunity to acquire a significant
proprietary interest in the Company, the plan links the interests of the
executives with those of the stockholders.

Using the independent compensation consultant's 1994 and 1997 reports which
were based on analysis of peer steel minimill companies, a target level for
long-term incentives for executives as a percentage of total compensation was
established using the Black-Scholes valuation model. The Board uses incentive
stock options as its long-term incentive. Since this component of total
compensation was not previously utilized, the Company's initial awards in fiscal
1994 were two to three times targeted annual awards. As a result, no awards were
made in 1995. At the discretion of the Committee, no awards were made in 1996
and 1997. The vesting schedule provides features intended to encourage long-term
retention and loyalty of its executive officers. It is anticipated that periodic
awards will be given to executive officers in the future so that, over time,
target levels are achieved. Once the value of the long-term incentive component
is determined, the number of incentive options was determined based on the
Black-Scholes valuation model. The ultimate value of incentive stock option is
based solely on the increase in value of the shares over grant price, which has
been market value on the date of the grant.

CONCLUSION. Total compensation is evaluated over a period of several years
since both the annual incentive component and long-term incentive component can
vary significantly from year to year depending on the cyclical nature of the
industry, Company performance, and individual performance. The Compensation
Committee believes that current total compensation for executive officers is
reasonable and competitive. The Compensation Committee believes that fiscal year
1997 compensation is consistent with its current compensation philosophy and
reflects corporate performance.

COMPENSATION OF CHIEF EXECUTIVE OFFICER. The compensation payable to Mr.
Meyers for all services performed on behalf of the Company in any capacity is
determined by the terms of agreements dated July 26, 1988, and August 28, 1986,
to which the Company and Mr. Meyers are parties. The two agreements provide that
Mr. Meyers is entitled to the greater of (x) a base amount of $350,000 adjusted
for increases in the consumer price index since December 1985 or (y) 2% of the
Company's pretax net income earned in the previous year (or 1%, if Mr. Meyers is
no longer both the Chairman and Chief Executive Officer of the Company with
substantial day-to-day managerial responsibilities).

POLICY ON DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Internal
Revenue Code limits to $1 million the Company's tax deduction for compensation
paid to each of the Company's most highly paid executive officers, unless
certain requirements are met. The Committee believes it unlikely in the short
term that the limitation will affect the Company. Additionally, the Company has
substantial net operating loss carryforwards to reduce income taxes. The
Committee's present intention is to structure executive compensation so that it
will be fully deductible provided that such continues to be in the best interest
of the Company and its stockholders.

Submitted by the Compensation Committee
Stanley S. Shuman, Chairman
Lawrence E. Golub
Albert P. Lospinoso

STOCKHOLDER RETURN PERFORMANCE GRAPH

The following graph compares the change in the cumulative total shareholder
return on the Company's Common Stock with the total return of the Standard &
Poor's 500 Stock Index and an index of peer companies, in the minimill steel
industry, selected by the Company for the period of five years commencing on
October 1, 1992 and ending on September 30, 1997. The graph assumes an
investment on October 1, 1992 of $100 in Bayou Steel Corporation Common Stock,
Standard & Poor's 500 Stock Index, and the common stock of the peer group, and
that all dividends were reinvested. The peer group consists of eight domestic
steel minimills.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
BAYOU STEEL CORPORATION

[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]

1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----

Bayou Steel 100 136 183 219 161 217
S&P 500 100 113 117 152 183 257
Peer Group 100 136 136 120 121 160

The peer group consists of the following corporations: Birmingham Steel
Corporation, Chaparral Steel Company, Commercial Metals Company, Laclede Steel
Company, New Jersey Steel Corporation, N.S. Group, Inc., Roanoke Electric Steel
Corporation, and Northwestern Steel and Wire Company.

RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS AUDITORS (PROPOSAL 2)

The Board of Directors has appointed the firm of Arthur Andersen LLP,
independent certified public accountants, to examine the financial statements of
the Company for the year ending September 30, 1998. Arthur Andersen LLP has been
employed as independent auditors to the Company and its predecessor since its
inception in 1979. Stockholders are asked to ratify the action of the Board of
Directors in making such an appointment.

If the appointment of Arthur Andersen LLP for fiscal year 1998 is not
ratified by the Stockholders, the selection of other independent auditors will
be considered by the Board of Directors.

Representatives of Arthur Andersen LLP are not expected to be present at
the Meeting, but will be afforded the opportunity to make a statement by open
telephone, if they so desire, and will also be available to respond to
appropriate questions by open telephone.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS AND IT IS INTENDED THAT PROXIES
WILL BE SO VOTED UNLESS MARKED TO THE CONTRARY OR AS ABSTENTIONS.

OTHER MATTERS

As of the date of this Proxy Statement, the Board of Directors does not
know of any other matters to be presented for consideration at the Annual
Meeting. If other matters should properly come before the Annual Meeting, the
persons named in the enclosed form of Proxy, or their substitutes, will vote the
shares represented by the proxies with respect to any such matters in accordance
with their best judgement.

Proposals which stockholders wish to include in the Company's proxy
materials relating to the 1999 Annual Meeting of Stockholders must be received
by the Company no later than September 22, 1998.

PLEASE PROMPTLY COMPLETE AND RETURN YOUR PROXY IN THE ENCLOSED
SELF-ADDRESSED, STAMPED ENVELOPE.

By order of the Board of Directors

RICHARD J. GONZALEZ,
SECRETARY

LaPlace, Louisiana
January 20, 1998

BAYOU STEEL CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 25, 1998

The undersigned hereby appoints HOWARD M. MEYERS proxy, with power of
substitution, to vote all shares the undersigned is entitled to vote at the
Annual Meeting of Stockholders of Bayou Steel Corporation to be held at One West
54th Street, New York, New York 10019, on February 25, 1998 at 9:00 A.M.
(E.S.T.), and all adjournments thereof as directed below and on the reverse side
of this card and, in their discretion, upon any other matters which may properly
come before the Meeting or any adjournment thereof.

PLEASE INDICATE BELOW AND ON THE REVERSE SIDE OF THIS CARD HOW YOUR CLASS A
COMMON STOCK IS TO BE VOTED.

IF NOT OTHERWISE SPECIFIED, SHARES WILL BE VOTED FOR ALL CLASS A NOMINEES IN
PROPOSAL 1 AND FOR PROPOSAL 2 ON THE REVERSE SIDE OF THIS CARD.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS #1 AND #2.

1. Election of the following nominees as Class A Directors: Lawrence E. Golub,
Jeffrey P. Sangalis and Stanley S. Shuman.
2. Ratification of the appointment of Arthur Andersen LLP as independent
auditors.

FOR WITHHELD
1. Election of Directors
(see reverse) [ ] [ ]

FOR AGAINST ABSTAIN
2. Ratification of the
selection of inde- [ ] [ ] [ ]
pendent auditors.

For all, except vote withheldrom the following candidate(s):

- -------------------------------------- The Board of Directors recommends a vote
FOR proposals 1 and 2.

This proxy when properly executed will be
voted in the manner directed herein by the
undersigned. If no direction is made, this
proxy will be voted FOR each of the nominees
for Class A Directors named on the reverse
side and FOR proposal 2.

SIGNATURE(S)____________________________________DATE__________________

NOTE: Please sign as name appears above. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.

The proxies will vote in accordance with their
discretion on such other matters as may properly
come before the meeting. The undersigned hereby
revoke all proxies heretofore given by the under-
signed to vote at said meeting or any adjournments
thereof.