The Steel Industry has made a significant contribution to the increase of energy use in Korea. This paper presents a method for development energy efficiency indicator in the steel industry based on the decomposing approach. This paper develops a logically consistent method for decomposing a change in energy consumption into the effects of three factors structural change, energy intensity and output level. Numerical illustration of the method is given using 1992∼2001 data for energy consumption in a virtual works. The most dominant factor is revealed to be the output effect. The energy intensity for the steel industry has increased and the effect of such a growth was relatively strongly reflected in the decomposition analysis. The structural effect turned out to be also important during the periods.