With a roar that sounds like one hundred buzz saws chewing through a forest, some 350 tons of scrap metal are turned into molten steel in a kettle-shaped electric furnace.

As three giant electrodes charged with 100 billion watts of power are lowered into the scrap, it creates a deafening roar and a shower of orange and white light that pours across the smudged faces, sooty clothes and hard hats of steelworkers at Jones & Laughlin Steel Co., a subsidiary of LTV Corp.

These highly efficient electric furnaces are a symbol of a new hope for the success of LTV, a company that was ailing until it was merged last year with the failing Lykes Corp. of New Orleans, creating a large conglomerate and the nation's fourth-largest steel company.

"These electric furnaces are our most modern and most efficient," said Ann Blaskovich, dressed in the steel mill haberdashery of hard hat, boots and a canvas-like overcoat that protected her from the soot accumulated over 126 years of steel making.

"They're profitable, and if the recession forces down the price of scrap, we're going to be making even more steel here," Blaskovich added as she escorted a visitor through the plant that sits on the banks of the Monongahela River in the shadow of this city's downtown.

The Pittsburgh Works -- located next to a tightly knit neighborhood whose residents are the descendants of Eastern Europeans who came here early in the century to work in the mills -- is but one of six steelmaking facilities LTV owns through its subsidiary, J & L. Until the merger of LTV and Lykes, concern was growing that the deteroriating plants, a mountain of debt and a tide of lower-priced steel imports would spell the end of the two companies.

But today, company officials and financial analysts exude confidence in the newly merged conglomerate similar to an old ships captain who after an overhaul of his craft proclaims "there's still a lot of life in the old girl."

"The big improvements that we predicted for the total have taken place.' said Paul Thayer, chairman and chief executive officer, as he relaxed on a couch in his poshly decorated office on the 14th floor of the LTV tower in downtown Dallas.

"While we are still in the process of reaping the quantitative benefits -- and will for the next six months to a year -- LTV is stronger and is perceived to be stronger to the outside world, including the financial community," he added.

Most of that optimism is generated by the new company's success in merging LTV's J & L facilities with those of Lyke's old steel subsidiary, Youngstown Sheet & Tube Co. The steel subsidiary is especially important to LTV because it contributes more than half of the firm's $5.2 billion annual revenues.

Thomas C. Graham, president and chief executive officer of J & L, estimates the current annual savings of the merger at about $60 million and says that figure could grow to $90 million by the end of the year. The savings to the steel company have come in four major areas:

Some of the older, less efficient steelmaking facilities have been closed down, including some in East Chicago and at the Pittsburgh Works. By year-end, J & L plans to close the remaining open hearth furnaces at the Brier Hill plant in Youngstown, Ohio, which should result in a substantial savings.

At the same time, the production functions of some J & L plants have been merged with those of some Youngstown plants. In one case, a J & L plant that had a shortage of iron ore pellets began receiving them from a Youngstown plant that had an excess. The Youngstown excess was causing it to incur a substantial penalty because it forced a production cutback at its Minnesota mine. Now the mine is working at full speed, supplying pellets to the J & L facility for a savings of $13 million.

The merger also has allowed the company to combine the administrative staffs of the two steel companies, allowing the closing of Youngstown's headquarters office and the elimination of 600 employes. Graham says the annual savings will be about $15 million. The combination also has allowed the steel firm to enter new markets in Chicago and Detroit with some $500,000 tons of flat-rolled steel.

With the merger came a new line of revolving credit with a borrowing limit of $275 million to be used in the steel and other subsidiaries. In addition, LTV plans annual capital expenditures of $250 million, with about $215 million allocated for steel. The capital budget includes the rehabilitation of some steelmaking facilities and environmental spending.

Of added benefit, LTV has enjoyed a prosperous economy during its first year as a merged firm. The buoyant economy has translated into strong earnings in most of the firm's subsidiaries.

For the first nine months ended Sept. 30, LTV reported net income of $113.9 million, or $2.81 a share fully diluted, on revenues of $6 billion. That is a substantial improvement over 1978 net losses of $53.1 million for LTV and $119.3 million for Lykes.

"We have been fortunate in enjoying strong steel demand right after the merger,' Graham said. 'It would have been a lot more difficult had the downturn come right after the merger.'

But although there have been many benefits from the merger, questions still hang over LTV. Like the sea captain with renewed confidence in his sailing craft, the Dallas company may face some difficulties plowing uncharted seas.

"Both for the intermediate and the longer term, we think the news about the company will be negative," said Eric Efron, a metals industry analyst for Merrill Lynch, Pierce, Fenner & Smith Inc. in New York. "Looking at their business, they are mostly mature and cyclical . . . We wouldn't expect it to turn more positive until next year at the earliest."

One of the largest problems facing LTV is long-term consolidated debt of more than $1.7 billion. But Thayer says he is confident the company can manage the debt, pointing out that there are no sinking fund requirements until after 1987, even though LTV will have annual interest payments of $148 million between now and then.

"Their debt is a legitimate concern," said Efron, explaining that LTV still will have to make interest payments even if the economy deals a heavy blow to the steel subsidiary. "In a moderate recession, they will probably be able to meet their obligations. But if we have a deeper recession, then we are going to see some financial strains."

Demand for steel already has fallen off, and the American Iron and Steel Institute predicts shipments of finished steel this year will be 99 million tons, down from an earlier forecast of 101 million tons. The AISI sees finished shipments at 91 million to 95 million tons for 1980.

An economic slowdown is particularly crucial to J & L because it sells about 65 percent to 70 percent of its steel to auto and appliance makers, industries that are the first to see a drop in sales at the advent of a recession.

"We are preparing for a poor first half," Graham said of 1980. He said indications of a slowdown showed up as early as July.

But beyond the temporary gyrations of the economy which tend to shake any cyclical industry, LTV's steel facilities suffer from a variety of troubles common to the entire U.S. steel industry. Those troubles include aging plants, heavy debt, government regulation and a tide of foreign steel imports. To make matters worse, the steel firms have been unable to secure price increases to keep up with costs, leaving them with little money to build new, more efficient facilities.

Industry ills have raised grave concerns in some steel companies that a foreign steel cartel similar to the Organization of Petroleum Exporting Countries could emerge. This would leave American industry -- including defense contractors -- at the hands of foreign steelmakers.

"We are basically a contracting industry," J & L's Graham said. "What happens is a very serious policy question. This country has to decide whether it wants a domestic steel industry. Until that becomes more apparent, we will continue to give up market share.'

Reaction by steel companies so far has been to retrench by shutting down their older, less-efficient capacity. U.S. Steel Corp. recently announced that it was shutting down 16 facilities across the country and laying off 13,000 employes. The next day, J & L formally announced the closing of the Brier Hill mill. "They're getting rid of all their dogs and cats," said an AISI official. At the same time, steel demand is increasing by about 2 percent to 3 percent each year, and several Western European nations also are cutting capacity, a situation the AISI says will create a worldwide shortage by 1985.

Graham, Thayer and other steel officials maintain the steel industry needshelp from Washington to make a comeback. The steel executives have called for relaxing environmental regulations, reducing time for depreciating plants from 15 to as little as five years, and lifting price controls they say have kept steelmakers from obtaining a satisfactory return of investments.

With these measures, steel companies would hope to boost their current 5 percent to 10 percent return on investment, which would make expenditures for new plant feasible. Thayer said a sustained period of 15 percent to 18 percent ROI is needed to raise capital for new plants that can cost as much as $4 billion.

In fact, a special report on the steel industry by Anthony M. Soloman, Treasury under secretary for monetary affairs, says the industry would need $4 billion a year for at least the next five years to meet environmental and expansion needs.

"They would like to make the capital improvements now, but they can't afford to do so," Merrill Lynch's Efron said. "What you really need is a substantial rise in profitability. They need to be able to raise prices to keep up with their costs."

Although the health of the U.S. steel industry is of great importance to LTV, the long-term prospects of the company also are linked to the success of its other interests in aerospace, meat packing, oil drilling equipment and ocean shipping. Those subsidiaries include:

The aerospace group -- which includes Vought Corp. and Kentron International -- has been one of LTV's strongest performers. But Vought has built its success on the A-7 fighter jet and the Lance missile, for which production probably will end by 1981. This means the aerospace unit must find new work.

"Vought has been the most consistent of the LTV companies," Efron said. "We look for that to continue. It has strong backlogs . . . .Beyond 1981, there will be no more A-7s, and they will have to find a lot of new business.'

A diversification program started by Vought about three years ago has landed the company several new contracts. These include the production of tail sections for the McDonnell Douglas DC10 and the jumbo Boeing 747. Recently the company landed a contract worth between $400 million and $500 million to manufacture the rear fuselage and tail section of Boeing's new 757 jetliner. In February the company won a similar contract valued at about $50 million to $100 million a year to manufacture the horizontal tail section of the new wide-bodied 757. Moreover, Vought is a top contender for a short-range attack rocket for the U.S. Army and NATO that could be worth up to $3 billion to $5 billion over a 15-year period.

Continental Emsco Co., which had been part of Lykes and which absorbed LTV's J & L Supply division to form a major manufacturer and distributor of oil-field equipment and supplies.

Continental Emsco already has shown signs of strength and is expected to do better, given the accelerated exploration for oil both by the United States and other countries. In trail-blazing negotiations that took more than a year and a half, the subsidiary won a $40 million contract last year to build offshore drilling rigs for the People's Republic of China.

Continental Emsco's future looks good, but company officials concede the passage of a stiff windfall profits tax on the oil industry could cloud the picture. "If the government does anything to discourage investment in the oil industry, then that would hurt Continental Emsco," Thayer said.

Wilson Foods has continually been a poor performer with a $3.1 million loss in the first quarter after breaking even in 1978 with sales of $2.2 billion. LTV's strategy is to aim its products and capacity at the segments of the meat market that currently are showing strength. For instance, Wilson has shut down much of its beef-processing facilities because of short beef supplies and is stressing pork. This has allowed the company to take advantage of healthy pork supplies and consumer demand for beef substitutes.

LTV credits this strategy with a second-quarter turnaround at Wilson, which posted operating income of $5.8 million that more than offset the first-quarter loss.

Finally, LTV's Lykes Bros. Steamship Co. -- a U.S. flag carrier operating primarily out of Gulf ports -- also has had its problems. Recent earnings have been hurt by depressed world trade, increasing competition and rising operating costs. Lykes Steamship reported an operating loss of $1.5 million for the second quarter.

But Thayer hopes the routes from the West Coast to China will enable the carrier to utilize its capacity better and that fuel surcharges will begin to take effect. Analysts warn that, despite these developments, margins are not expected to widen until world trade becomes more robust.