(FORTUNE Magazine) – It may seem ironic, or poetic, or even just fitting that almost four years after the bursting of the new-economy bubble, the oldest of old-economy industries, steel, appears to be positively frothy. Steel? It hasn't had a good year since Andrew Carnegie was building libraries, right? Well, hang on to your hardhat, because steel prices--and the prices of steel company stocks--have been going gaga over the past 12 months. The question then is, Are we looking at the next mania? A steel bubble, of all things?

Let's look at the evidence (while acknowledging that the notion of a steel bubble makes for a great visual). First, the numbers: The price of steel scrap from auto production climbed a stunning 69% during 2003, to more than $215 a ton. This past June domestic hot-rolled steel was going for $260 a ton; now, for April delivery, the price is $410 a ton. Then there are the stocks. Good, old (well, old, at least) U.S. Steel's stock (X) has gone from $10 to $36 in less than a year. And how about scrap dealer Schnitzer Steel of Portland, Ore.? Its stock has rocketed from $10 to above $50 over the past 12 months. There was recently even a red-hot steel IPO: International Steel Group (ISG) is up more than 50% since it began trading in mid-December.

There are more-subjective indications as well. Like the fact that hoary bankruptcy banker Wilbur Ross has been lauded in FORTUNE (first!) and then on the cover of Business Week for his role in building ISG (he's chairman) and for his prescience in recognizing the return of steel. Seems to me Ross is considered today what John Doerr was five years ago: an industry visionary who can do no wrong. (Uh-oh.)

But wait a minute. Wasn't steel recently so sick that President Bush (a free-trading Republican, need I remind you) felt compelled to protect it with tariffs? Yes, in fact it was. And you may also remember that Bush lifted those tariffs in December after the EU threatened to retaliate. When the White House suggested it wasn't bowing to political pressure and was lifting the tariffs because steelmakers had returned to health, most of us dismissed it as a political fig leaf. Turns out it was a point of fact. True, the recovery isn't lifting all ships in this industry, but all of a sudden things are looking pretty damn good for big steel.

So how did the steel business get its mojo back? In a word: China. One happy investor in Schnitzer Steel, speaking of the company's business, said to me recently, "The Chinese are buying everything Schnitzer's got." The Chinese also reportedly bought some of the scrap steel from the World Trade Center wreckage. There's even a brisk business in exporting old steel mills from the U.S. to Asia! Yes, thanks to its incredible construction and infrastructure boom, China now has an insatiable appetite for steel. Overall Chinese steel demand probably hit 257 million metric tons last year, up 22% from the previous year, according to the International Iron and Steel Institute, and it could be up another 13% this year. (For perspective, U.S. steelmakers produced an estimated 101 million tons last year. Peak was 151 million tons in 1973.)

Who's making out? Of the new Big Three steelmakers, ISG, which has many of the assets of the old Bethlehem and LTV companies, could fare best. Ross used his leverage to work out progressive (as they say) deals with the grateful unions in exchange for saving some jobs. U.S. Steel made a similar arrangement when it snapped up the bankrupt National Steel. Interestingly, mini-mill Nucor, long the only darling of this business, could benefit the least, as prices of its raw material (read: scrap) have surged. Yes, its stock has climbed nicely over the past year, but NUE is still below where it traded in 1994, and the company recently imposed a $20-a-ton "raw materials surcharge" to make up for spiraling scrap costs.

While so many American businesses these days are breaking their backs trying either to sell to the Chinese or to compete with Chinese imports coming stateside, the steel biz is in a unique and enviable position. Of course, the fact that the steel boom is for the most part courtesy of the Chinese leaves the steelmakers just like everybody else--at the mercy of China. And as happens with all bubbles, manias, or just plain nice runs, at some point China's insatiable demand for steel will dry up.