You would think Keith Busse would be celebrating. In only its second year, his steel minimill, Steel Dynamics Inc., has grown into a profit leader in the industry. Busse, backed by eager investors, is racing to add $350 million in expansions and double his steelmaking capacity. But as he looks toward 1998, he worries. Imports are pouring in at record levels. The strong dollar, combined with feeble markets in Asia, promises more of the same in 1998. "It could be a troubled year," Busse says.

The grim prospects are enough to make steelmakers dewy-eyed for the year that just ended. Demand in 1997 was sturdy enough for the industry to run its mills nearly flat out, shipping 106 million tons, up 3% from a strong 1996. Profits were solid, with industry leader U.S. Steel Group of USX Corp. nearly doubling earnings. Looking toward 1998, steelmakers expect demand to stay nearly as strong. The big questions: Whose steel is the U.S. going to consume, and at what price?

The likely answers are: foreign and cheap. In the second half of last year, low-price imports from countries such as Brazil and Russia helped hammer down the price of the industry's standard flat-rolled steel from $360 per ton to $310. Now, according to PaineWebber Inc.'s Peter F. Marcus, the currency crisis in Korea has driven down steelmakers' dollar-denominated costs to below $200 per ton. "That steel's got to go somewhere," frets American Iron & Steel Institute President Andrew G. Sharkey. If cheap imports drive U.S. flat-rolled steel prices below $300 per ton, as many expect, look for American steelmakers to push trade suits.

"BETTER PREPARED." Not all is grim. Recovery in Europe is pushing prices up closer to U.S. levels. If this continues, as expected, it should eventually help to buoy U.S. prices. Also, prices are on the rise for steel other than the flat-rolled types, including beams and bars. What's more, U.S. steelmakers are much better positioned to duke it out in world markets than in previous decades. U.S. minimills such as Steel Dynamics and Nucor Corp. run the most efficient operations in the world. And the integrated companies, in addition to chopping out costs, have used the 1990s boom to clean up their balance sheets. "We are much better prepared [for a downturn] than we would have been several years ago," says U.S. Steel President Paul J. Wilhelm.

Largely sheltered from the Asian turbulence, aluminum companies are coasting confidently into 1998. The skirmish in the can business is mostly over, now that small players have abandoned the business, leaving it to Aluminum Co. of America and Alcan Aluminum Ltd. Meanwhile, with low customer inventories and a solid price, a tad above the 10-year average, for their products, aluminum makers can be thankful they don't sell steel.

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