Production at the Corus hot strip mill at Llanwern near Newport is to restart next month, the steel giant says.
It has been mothballed since January, but the company says there has been some growth in orders and it wants to satisfy this increasing demand.
However, the restart will not reverse any of the 528 job losses at the plant.
Steel union Community welcomed the move and said it would be seeking a meeting with Corus to discuss the long-term implications.
Tim Rutter, head of communications for Corus Strip Products UK, said the hot strip mill at its Port Talbot steelworks further along the south Wales coast is now working "flat out" and senior managers have taken the decision to restart Llanwern to increase capacity.
However, he was cautious about the upturn in business, saying: "We don't know how sustainable this slight increase in demand will be.
"We will constantly review what capacity is needed, our first choice is always to use Port Talbot because of the energy situation and the cost of transporting steel to Llanwern."