Conservative Miriam Cates said £50m announced for its sister site in Rotherham would provide added stability and establish the right conditions for a sale.
Ms Cates, who represents Stocksbridge, spoke out after GFG Alliance said it was investing the sum to bring both sites back to production.
It wants to restart furnaces in Rotherham mothballed following the collapse of lender Greensill in March.
The site produces steel used in construction and infrastructure projects. It also supplies 100 per cent of the material used in Stocksbridge, which is part of the Speciality Steels division that includes Brinsworth strip mill in Rotherham and Performance Steel in West Bromwich.
The three sites were put up for sale in May by UK parent Liberty Steel.
Ms Cates said: “It is good news that Liberty Steel has been able to secure additional funds to restart production at its Rotherham facility. This is important for Speciality Steels in Stocksbridge as the majority of raw product used in Stocksbridge comes initially from Rotherham.
“This increase in supply will allow Speciality Steels to continue to fulfil orders and provide some security for the business and its employees.
“With the added stability created by this additional money, the time is now right to move towards a sale of the Speciality Steels business and to provide the Stocksbridge site and its workforce with the investment and security they need to continue producing high value, high quality, specialist steel.”
Meanwhile, GMB Union has called for ‘cast iron’ guarantees the £50m will protect jobs long term.
Ross Murdoch, GMB National Officer, said: “Liberty steel workers have been through the grinder during the past couple of years.
“GMB has been in touch GFG Alliance and we need cast iron guarantees this cash will not only allow plants to reopen - but protect jobs in the long term.
“We've said for years UK Steel is at a disadvantage against European steel makers who enjoy much more favourable energy costs.