UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549

                                      FORM 10-Q
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                         THE SECURITIES EXCHANGE ACT OF 1934

          (Mark One)             

             [X]  For the quarterly period ended       September 30,  1998

                                         OR


             [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                             THE SECURITIES EXCHANGE ACT OF 1934


          Commission file number                   1-7276

                                 EXOLON-ESK COMPANY
               (Exact name of registrant as specified in its charter)


                 Delaware                             16-0427000
              (State or other                      (I.R.S. Employer
              jurisdiction of                     Identification No.)
             incorporation or
               organization)


               1000 East Niagara Street, Tonawanda, New York 14150
                    (Address of Principal Executive Offices)
                                    (Zip Code)

                                 (716) 693-4550
               (Registrant's telephone number, including area code)


           (Former name, former address and former fiscal year, if changed
                                 since last report)

          Indicate by check mark whether the registrant (1) has filed all
          reports required to be filed by Section 13 or 15(d) of the
          Securities Exchange Act of 1934 during the preceding 12 months
          (or for such shorter period that the registrant was required to
          file such reports), and (2) has been subject to such filing
          requirements for the past 90 days.  YES  X    NO ____ 

          As of November 11, 1998 the registrant had outstanding 481,995
          shares of $1 par value Common Stock and 512,897 shares of $1
          par value Class A Common Stock.


                           PART I - FINANCIAL INFORMATION
                            Item 1.  Financial Statements
                                 Exolon-ESK Company
                        Consolidated Condensed Balance Sheet
                         (in thousands except share amounts)

                                                    (Unaudited)
       ASSETS                                      September 30, December 31,
                                                            1998         1997
       Current assets:

            Cash                                          $6,096     $  2,503
            Accounts receivable (less allowance
             for doubtful accounts of                      
             $250 in 1998 and $350  in 1997)               7,100        9,582
            Inventories                                   20,869       16,636
            Prepaid expenses                                  81          183
            Deferred income taxes                            354          356
            Total Current Assets                          34,500       29,260
       Investment in Norwegian joint venture               6,030        5,505
       Property, plant and equipment, at cost             75,488       71,362
       Accumulated depreciation                         (47,224)     (45,072)

            Net property, plant and equipment             28,264       26,290
       Bond sinking fund                                   2,060          885
       Other assets                                        1,497        1,337
       Total Assets                                      $72,351      $63,277

       LIABILITIES AND STOCKHOLDERS' EQUITY
       Current liabilities:
            Current maturities of long-term debt        $  1,367     $  1,367
            Accounts payable                               4,196        2,661
            Accrued expenses                               2,831        1,858
            Income taxes payable                              24          196
                 Total Current Liabilities                 8,418        6,082
       Deferred income taxes                               1,839        1,834
       Long-term debt excluding current portions          25,558       20,033

       Other long-term liabilities                         2,525        2,539
                 Total Liabilities                        38,340       30,488
       Stockholders' equity:
            Preferred stock - Series A - 19,364              276          276

            Preferred stock - Series B - 19,364              166          166
            Common stock of $1 par value -
             Authorized 600,000 shares,                      
             512,897 issued                                  513          513
            Class A common stock of $1 par
             value - Authorized 600,000                      
                 shares, 512,897 issued                      513          513
            Additional paid-in capital                     4,345        4,345
            Retained earnings                             29,431       28,209
            Accumulated other comprehensive                (865)        (865)
            Treasury stock, at cost                        (368)        (368)
                 Total Stockholders' Equity               34,011       32,789

       Total Liabilities and Stockholders' Equity        $72,351      $63,277

          The accompanying notes are an integral part of these statements.



                                Exolon-ESK Company
                  Consolidated Condensed Statements of Operations
                                     Unaudited
                      (in thousands except per share amounts)


                                             Three Months     Nine Months
                                                 Ended          Ended 
                                             September 30,   September 30,
                                              1998    1997   1998    1997

       Net sales                            $14,598 $19,166 $52,667 $59,391

       Cost of goods sold                    12,657  14,617  42,768  45,371
            Gross Profit                      1,941   4,549   9,899  14,020

       Operating Expenses

       Depreciation                             903     700   2,369   2,211
       Selling, general & administrative
        expenses                              1,449   1,362   4,306   4,076
       Research and development                   -      20      32      44
                                              2,352   2,082   6,707   6,331


            Operating (Loss) Income           (411)   2,467   3,192   7,689
       Other (Expense) Income:
            Equity in Earnings before
             income taxes of Norwegian 
             Jt. venture                        201     254     525     333
            Interest expense                  (406)   (260)   (824)   (775)

            Abandoned acquisition costs       (364)       -   (364)       -
            Miscellaneous expense             (161)    (22)   (325)   (263)
                                              (730)    (28)   (988)   (705)


            (Loss) Earnings before income
             taxes                          (1,141)   2,439   2,204   6,984

       Income tax benefit (expense)             367 (1,061)   (950) (2,766)
             Net (Loss) Earnings             ($774)  $1,378  $1,254  $4,218


       (LOSS) EARNINGS PER COMMON SHARE:
            Basic                           ($0.83)   $1.42   $1.27   $4.34
            Diluted                         ($0.83)   $1.40   $1.24   $4.20


       (LOSS) EARNINGS PER CLASS A COMMON SHARE:
            Basic                           ($0.78)   $1.33   $1.19   $4.08
            Diluted                         ($0.78)   $1.32   $1.17   $3.96

                          
            The accompanying notes are an integral part of these statements.


                                    Exolon-ESK Company
                     Consolidated Condensed Statements of Cash Flows
                                        Unaudited
                                      (in thousands)
                                                               Nine Months
                                                                  Ended
                                                              September 30,
                                                               1998    1997

              Net cash provided by operating activities      $3,618  $3,246

              Cash Flow from Investing Activities:
                  Capital expenditures                      (4,342) (8,708)
                  Proceeds from restricted cash
                   equivalents                                    -   5,334

              Net Cash Used by Investing Activities         (4,342) (3,374)

              Cash Flow from Financing Activities:
                  Borrowings on debt                          4,350     831
                  Dividends paid                               (33)    (33)

              Net Cash Provided by Financing Activities       4,317     798

              Net increase in cash                            3,593     670

              Cash at beginning of period                     2,503     275

              Cash at end of period                          $6,096    $945


          The accompanying notes are an integral part of these statements.


                                 EXOLON-ESK COMPANY
                NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                     (Unaudited)


          NOTE 1    The accompanying unaudited consolidated condensed
                    financial statements have been prepared in accordance
                    with generally accepted accounting principles for
                    interim financial information and with the instructions
                    to Form 10-Q and Article 10 of Regulation S-X. 
                    Accordingly, they do not include all of the information
                    and footnotes required by generally accepted accounting
                    principles for complete financial statements.  In the
                    opinion of management, all adjustments  (consisting of
                    normal recurring accruals) considered necessary for a
                    fair presentation have been included.  Results for the
                    period ended September 30, 1998 are not necessarily
                    indicative of the results that may be expected for the
                    year ending December 31, 1998.

                    For further information, refer to the financial
                    statements and footnotes thereto for the year ended
                    December 31, 1997 included in the Company's Annual
                    Report on Form 10-K filed with the Securities and
                    Exchange Commission.

          NOTE 2    The following are the major classes of inventories (in
                    thousands) as of September 30, 1998 and  December 31,
                    1997 :


                                            September 30,    December 31,
                                                  1998            1997
                                              (Unaudited)

                    Raw Materials                  $1,623         $2,839

                    Semi-Finished and
                     Finished Goods                21,203         16,183

                    Supplies and Other              1,531            965

                                                   24,357         19,987
                     Less:  LIFO Reserve          (3,488)        (3,351)

                                                  $20,869        $16,636


          NOTE 3    Contingencies

               a.   Environmental issues

                    (i)  Hennepin, Illinois Plant

                    On October 6, 1994, the Company entered into a Consent
                    Order (the  Consent Order ) with the Illinois Attorney
                    General and the Illinois Environmental Protection
                    Agency ( IEPA ) in complete settlement of a complaint
                    brought by them which alleged that the Company had
                    violated certain air quality requirements in the
                    operating permit for its Hennepin, Illinois plant.  The
                    Consent Order provides a schedule for the Company to
                    install a Continuous Emissions Monitoring System
                    ( CEMS ) and to implement the required Best Available
                    Control Technology ( BACT ) for air emissions, pursuant
                    to an IEPA approved construction and operating permit. 
                    The Company obtained final approval for a construction
                    permit to implement the BACT during 1996.

                    In order to comply with the Consent Order and complete
                    facility improvements, the Company expects to incur
                    capital costs of up to $14,000,000.  As of September
                    30, 1998, the Company has incurred approximately
                    $13,517,000 of capital costs related to the facility
                    improvements.  The remaining costs are expected to be
                    incurred in the fourth quarter of 1998.  The cost of
                    these required capital improvements was financed
                    principally with the $13,000,000 of proceeds from long-
                    term bonds, a portion of which are tax-exempt, issued
                    by the Upper Illinois River Valley Development
                    Authority.

                    (ii) Norwegian Joint Venture

                    The Government of Norway held discussions with certain
                    Norwegian industries including the abrasive industry
                    concerning the implementation of reduced gaseous
                    emission standards.  The Company's joint venture is
                    participating in these discussions to help achieve the
                    Norwegian Government's objectives as well as assuring
                    long term economic viability for the joint venture. 

                    The Norwegian State Pollution Control Authority has
                    issued limits regarding dust emissions and Sulfur
                    Dioxide emissions that will apply to all Norwegian
                    silicon carbide producers.  Specific target emission
                    limits have been set, and a compliance timetable
                    ranging from the present until January 1, 2001 has been
                    established.  The costs associated with achieving
                    compliance with these limits are uncertain as a result
                    of various alternatives presently being considered by
                    the Norwegian joint venture.  Management believes the
                    joint venture can meet the sulfur requirements with
                    changes in production techniques and raw material
                    procurement including low sulfur coke rather than
                    capital expenditures.  Based upon current known
                    information the Company estimates the costs associated
                    with achieving  compliance with these limits would
                    range from $4 to $5 million.   

               b.   Legal Matters
                    (i) Federal Proceedings and Related Matters

                    On October 18, 1994, a lawsuit was commenced in the
                    U.S. District Court for the Eastern District of
                    Pennsylvania (No. 94-CV-6332) under the title "General
                    Refractories Company v. Washington Mills Electro
                    Minerals Corporation and Exolon-ESK Company."  The suit
                    purports to be a class action seeking treble damages
                    from the defendants for allegedly conspiring with
                    unnamed co-conspirators during the period from January
                    1, 1985 through the date of the complaint to fix,
                    raise, maintain and stabilize the price of artificial
                    abrasive grains and to allocate among themselves their
                    major customers or accounts for purchases of artificial
                    grains.  The plaintiffs allegedly paid more for
                    abrasive grain products than they would have paid in
                    the absence of such anti-trust violations and were
                    allegedly damaged in an amount that they are presently
                    unable to determine. On or about July 17, 1995, a
                    lawsuit captioned  Arden Architectural Specialties,
                    Inc. v. Washington Mills Electro Minerals Corporation
                    and Exolon-ESK Company,  (95-CV-05745(m)), was
                    commenced in the United States District Court for the
                    Western District of New York.  The Arden Architectural
                    Specialties complaint purports to be a class action
                    that is based on the same matters alleged in the
                    General Refractories complaint.  In October 1997, the
                    Norton Company was named an additional defendant in
                    both cases.  The Company believes that it has
                    meritorious defenses to the allegations, and it intends
                    to vigorously defend against the charges.

                    In 1994, the U.S. Defense Logistics Agency (the "DLA")
                    temporarily suspended the Company from contracting with
                    the U.S. Government under procurement or non-
                    procurement programs.  During 1997, the Company and the
                    DLA entered into a two-year Administrative Agreement
                    which lifted the suspension.

                    (ii)  Exolon-ESK Company of Canada, Ltd.

                    An action for damages was brought against Exolon-ESK
                    Company and Exolon-ESK Company of Canada, Ltd. by
                    International Oxide Fusion Inc. of Niagara Falls,
                    Ontario in December, 1996.  This action alleges that
                    the Thorold, Ontario facility is in the possession of
                    technology that was provided in 1990 to Exolon-ESK
                    Company to produce MagChrome and Fused Magnesium Oxide
                    and has refused to pay further royalty payments. 
                    International Oxide Fusion Inc. claims damages for loss
                    of royalty payments from the number 4 furnace. 
                    Further, International Oxide Fusion alleges that number 
                    6 furnace, which was designed in 1996, utilizes the
                    International Oxide Fusion's 1990 furnace design
                    technology and seeks royalty payment.  Exolon-ESK
                    Company and Exolon-ESK Company of Canada, Ltd. have
                    filed a Statement of Defense and Counterclaim against
                    International Oxide Fusion Inc., Edward J. Bielawski,
                    Robert Thiel (the principals of International Oxide
                    Fusion Inc.), Thomas Farr and Fusion Unlimited
                    (Niagara) Inc. which was issued in January, 1997 in
                    Toronto, Ontario.  The Plaintiffs originally sought
                    $182 million as damages, which management considers to
                    be beyond any reasonable understanding.  The Company's
                    counterclaim is in the amount of approximately $10
                    million.  A motion for summary judgment on royalty
                    payments for furnace number 4 was decided against the
                    Company in December 1997 and the Company paid
                    royalties, interest and other costs of approximately
                    $298,000 Canadian dollars in April 1998.  A further
                    expedited trial was ordered on the remaining claims and
                    counterclaim.  It is the opinion of management that the
                    number 6 furnace does not use the same technology as
                    the number 4 furnace.

                    A separate, unrelated lawsuit was commenced by The
                    Exolon-ESK Company of Canada, Ltd. against Theeb, Ltd.
                    and Edward J. Bielawski in August, 1997.  The action
                    arises out of a 1985 contract in connection with a
                    crane and its runway system.  The Company is seeking $2
                    million in damages for negligence and punitive damages. 
                    A Statement of Defense has been filed by the
                    defendants.

                    In June 1993, the Company commenced a civil legal
                    action in Ontario, Canada Court (General Division)
                    against one of its former officers and certain former
                    employees of Exolon-ESK Company of Canada, Ltd.
                    (Exolon-Canada) ( the "Defendants") on various charges
                    related to allegations that they defrauded the Company
                    and Exolon-Canada of money, property and services over
                    many years (the  Perrotto Case ). Summary Judgment was
                    granted on the issue of liability against Paul Perrotto
                    and Michael Perrotto on July 16, 1997 with a Reference
                    (hearing) directed in Toronto on the issue of damages. 
                    The hearing is expected to be held in the Spring 1999. 
                    The action remains ongoing against various other
                    Defendants.

          NOTE 4    Comprehensive Income

                    Effective January 1, 1998 the Company adopted Statement
                    of Financial Accounting Standards No. 130, "Reporting
                    Comprehensive Income."  Statement 130 Establishes new
                    rules for the reporting and display of comprehensive
                    income and its components.  The adoption of this
                    Statement had no impact on the Company's net income or
                    stockholders' equity.  Statement 130 requires the
                    Company's cumulative translation adjustment, which
                    prior to adoption was reported separately in
                    stockholders' equity, to be included in other
                    comprehensive income.  Prior year financial statements
                    have been reclassified to conform with the requirements
                    of Statement 130.  During the three months and nine
                    months ended September 30, 1998 and 1997, total
                    comprehensive income (loss), which was comprised of net
                    income and foreign currency translation adjustments,
                    equaled net income (loss).

          NOTE 5    Earnings Per Share

             The following table sets forth the computation of basic and
        diluted earnings per share (in thousands except share
        information):


                                          Three Months      Nine Months
                                              Ended            Ended 
                                          September 30,    September 30,

                                          1998     1997    1998     1997
         Numerator: 
            Net (loss) income
             available to common
             stockholders after
             preferred stock
             dividends                   $(796)   $1,368   $1,221   $4,185

         Numerator for basic earnings
          per share:
             Common stockholders (50%)    (398)      684      610    2,093

             Class A common
              stockholders (50%)          (398)      684      611    2,092
                                          (796)    1,368    1,221    4,185

         Net income available to
          common stockholders after
          assumed conversion of
          preferred stock                $(796)   $1,368   $1,254   $4,185

         Numerator for diluted
          earnings per share:
             Common stockholders (50%)    (398)      689      627    2,109

             Class A common
              stockholders (50%)          (398)      689      627    2,109
                                         $(774)   $1,378   $1,254   $4,218

         Denominator:
           Common stock:
             Denominator for basic
              earnings per share -
              weighted average shares   481,995  481,995  481,995  481,995

             Effect of dilutive 
              securities - convertible      
              preferred stock                 -   21,785   21,785   21,785
             Denominator for diluted
              earnings per share - 
              adjusted weighted
              average shares and
              assumed conversions       481,995  503,780  503,780  503,780

           Class A common stock:

             Denominator for basic 
              earnings per share -
              weighted average shares   512,897  512,897  512,897  512,897
             Effect of dilutive 
              securities - convertible
              preferred stock                 -   21,785   21,785   21,785
             Denominator for diluted
              earnings per share -
              adjusted weighted
              average shares and
              assumed conversions       512,897  534,682  534,682  534,682

        The effect of convertible preferred stock on earnings per share
        for three months ended September 30, 1998, has not been considered
        as the impact is anti-dilutive.


        Item 2.  Management's Discussion and Analysis of Financial
        Condition and Results of Operations

        Results of Operations

        Comparison of the Nine Months Ended September 30, 1998  with the
        Nine Months Ended September  30, 1997.

             Net Sales. Total net sales decreased by 11% to $52,667,000
        during the nine months ended September 30, 1998 from $59,391,000
        in the first nine months of 1998 primarily due to decreased demand
        and increased foreign competition. 

             Gross Profit.  Gross profit before depreciation expense was
        $9,899,000  in the first nine months of 1998 compared to
        $14,020,000 in the first nine months of 1997.  As a percent of net
        sales, gross margins were 19% in the first nine months of 1998
        compared to 24% in the same period of 1997.  The decrease in gross
        profit as a percent of net sales from the first nine months of
        1998 can be attributed to an increase in manufacturing costs
        compared to the same period in 1997 and the decrease in overall
        sales volume.   

             Operating Expenses.  Total operating expenses increased to
        $6,707,000 in the nine months ended September 30, 1998 from
        $6,331,000 in the same period of 1997.  Operating expenses as a
        percent of sales increased to 13% in the first nine months of 1998
        versus 11% for the same period in 1997.  The primary reason for
        the increase as a percent of sales is the decreased sales volume
        in the first nine months of 1998 as compared to the same period in
        1997.  Selling, general and administrative expense increased to
        $4,306,000 in the first nine months of 1998 compared to $4,076,000
        for the same period in 1997.  The primary reasons for the increase
        include increased professional service fees related to accounting
        and tax projects and increased commission expense.

             Operating Income.  Operating income decreased by 58% to
        $3,192,000 in the nine months ended September 30, 1998 from
        $7,689,000 in the nine months ended September 30, 1997 primarily
        due to the decrease in net sales and increases in cost of sales.

             Norwegian Joint Venture.  The Company's 50% share of the pre-
        tax earnings of its Norwegian joint venture, Orkla Exolon A/S, was
        $525,000 for the nine months ended September 30, 1998 versus
        $333,000 in the nine months ended September 30, 1997.  The
        Company's share in the venture's net sales was $5,555,000 in the
        nine months ended September 30, 1998 as compared to $5,475,000 in
        the nine months ended September 30, 1997. 

             Interest and Miscellaneous Expense. Interest expense
        increased in the first nine months of 1998 to $824,000 from
        $775,000 in the first nine months of 1997.  The primary reason for
        this increase is the interest costs related to the Company's
        facility improvements in Illinois.  Through June 30, 1998, these
        interest costs were capitalized.  As of July 1, 1998, these costs
        are being expensed as the facility has been placed into service.

             Miscellaneous expense was $325,000 in the first nine months
        of 1998 compared to miscellaneous expense of $263,000 in the nine
        months ended September 30, 1997. 

             Abandoned Acquisition Costs.  On March 24, 1998, Exolon-ESK
        Company filed a Form 8-K with the SEC with respect to a Letter of
        Intent with Elektroschmelzwerk Kempten GmbH ("ESK") to purchase
        all of the European silicon carbide assets of ESK.  During the
        period of March 24, 1998 through September 30, 1998, the Company
        conducted its due diligence of the Acquisition through several
        outside vendors and internal personnel at a cost of $364,381. 
        Effective September 30, 1998, the acquisition has been abandoned
        and the Company has ceased all activities related to the
        acquisition.

             Income Tax.  The Company's effective tax rate was 43% for the
        nine months ended September 30, 1998 as compared to 40% for the
        nine months ended September 30, 1997.

             Comparison of the Three  Months Ended September 30, 1998 with
        the Three  Months Ended September 30, 1997.

             Net Sales. Total net sales decreased by 24% to $14,598,000 in
        the three  months ended September 30, 1998 from $19,166,000 in the
        three months ended June 30, 1997 due to decreased market demand
        and increased foreign competition.

             Gross Profit.  Gross profit before depreciation expense was
        $1,941,000  in the three  months ended September 30,1998 compared
        to $4,549,000 in the three months ended September 30, 1997.  As a
        percent of net sales, gross margins were 13% in the third quarter
        of 1998 compared to 24% in the same period of 1997.  The decrease
        in gross profit as a percent of net sales from the second quarter
        of 1998 compared to the same period for 1997 can be attributed to
        increases in costs of products sold combined with a decrease in
        the overall sales volume.  

             Operating Expenses.  Total operating expenses increased to
        $2,352,000 in the three  months ended September 30, 1998 from
        $2,082,000 in the same period of 1997.  Operating expenses as a
        percent of net sales increased to 16% for the three months ended
        September 30, 1998 as compared to 11% for the three  months ended
        September 30, 1997.  The Company's largest portion of operating
        expense, selling, general and administrative expense, increased to
        $1,449,000 in the three  months ended September 30, 1998 compared
        to $1,362,000 during the three months ended September 30, 1997. 
        As a percent of net sales, selling, general and administrative
        expense increased to 10% in the three months ended September 30,
        1998 compared to 7% for the three months ended September 30, 1997.

             Operating Income.  Operating income decreased to $411 in the
        three months ended September 30, 1998 from $2,467,000 in the three
        months ended September 30, 1997 primarily as a result of the
        decrease in net sales.

             Norwegian Joint Venture.  The Company's 50% share of the pre-
        tax earnings of its Norwegian joint venture, Orkla Exolon A/S,
        were $201,000 for the three months ended September 30, 1998 versus
        $254,000 in the three months ended September 30, 1997.  The
        Company's share in the venture's net sales was $1,824,000 in the
        three months ended September 30, 1998 versus $1,537,000 in the
        three months ended September 30, 1997. 

             Interest and Miscellaneous Expense. Interest expense
        increased in the three months ended September 30, 1998 to $406,000
        from $260,000 in the three months ended September 30, 1997.  The
        primary reason for this increase is the interest costs related to
        the Company's facility improvements in Illinois.  Through June 30,
        1998, these interest costs were capitalized.  As of July 1, 1998,
        these costs are being expensed the facility has been placed into
        service.

             Miscellaneous expense was $161,000 in the three months ended
        September 30, 1998 compared to miscellaneous expense of $22,000 in
        the three months ended September 30, 1997.  This increase is
        primarily due to the foreign currency fluctuations related to the
        Company's Canadian operations. 

             Abandoned Acquisition Costs.  On March 24, 1998, Exolon-ESK
        Company filed a Form 8-K with the SEC with respect to a Letter of
        Intent with Elektroschmelzwerk Kempten GmbH ("ESK") to purchase
        all of the European silicon carbide assets of ESK.  During the
        period of March 24, 1998 through September 30, 1998, the Company
        conducted its due diligence of the Acquisition through several
        outside vendors and internal personnel at a cost of $364,381. 
        Effective September 30, 1998, the acquisition has been abandoned
        and the Company has ceased all activities related to the
        acquisition.

        Liquidity and Capital Resources

             As of September 30, 1998, working capital (current assets
        less current liabilities) has increased to $25,977,000, when
        compared to $23,178,000 as of December 31, 1997.  Accounts
        receivable decreased by $2,482,000 as of September 30, 1998 versus
        1997 year end primarily as a result of the decrease in sales
        levels during the nine months ended September 30, 1998 as compared
        to the 1997 year.  Inventories increased by $4,233,000 as of
        September 30, 1998 as compared to December 31, 1997.  Accounts
        payable increased by $1,501,000 as of September 30, 1998 when
        compared to December 31, 1997.  Current maturities of long term
        debt have remained at the same level as of September 30, 1998 as
        they were at December 31, 1997.

             For the nine months ended September 30, 1998, net cash
        provided by operating activities was $3,618,000.  Cash reserves
        increased by $3,593,000 as of September 30, 1998 compared to
        December 31, 1997.  Net cash provided by operating activities was
        used to fund $4,342,000 of capital expenditures in the nine months
        ended September 30, 1998.

             The Company's current ratio decreased to 4.0 to 1.0 at
        September 30, 1998 from 4.8 to 1.0 as of December 31, 1997.  The
        ratio of total liabilities to shareholder's equity increased at
        1.1 to 1.0 as of September 30, 1998 as compared to 0.9 to 1.0 at
        December 31, 1997.  Management believes that the cash provided by
        operations and long-term borrowing arrangements will provide
        adequate funds for current commitments and other requirements in
        the near future.

             The Company has been directed by the Illinois Environmental
        Protection Agency ("IEPA") to control its sulfur emissions at its
        Hennepin, Illinois silicon carbide furnace plant.   For further
        information see Note 3(a)(i) to the Notes to Consolidated
        Financial Statements on page 5, which is incorporated herein by
        reference.

             Reference is made to the descriptions of the following legal
        matters, within Note 3(b) to the Notes to Consolidated Financial
        Statements under the caption  Legal Matters  beginning on page 6
        of this Form 10-Q Report, which descriptions are incorporated
        herein by reference:  (1) civil law suits brought against the
        Company and others commenced by General Refractories Company in
        October 1994 and by Arden Architectural Specialties, Inc. in July
        1995; (2) a temporary suspension imposed upon the Company by the
        U.S. Defense Logistics Agency; (3) a civil lawsuit brought against
        the Company in December 1996 by International Oxide Fusion, Inc.;
        (4) civil lawsuit brought by the Company in August 1997 against
        Theeb, LTD and Edward J. Bielawski; and (5) a legal action
        commenced in June 1993 by the Company in Ontario, Canada seeking
        $2,000,000 in damages against certain former officers and
        employees.

        Impact of the Year 2000

             The Year 2000 Issue is the result of computer programs being
        written using two digits rather than four to define the applicable
        year.  Any of the Company's computer programs or hardware that
        have date-sensitive software or embedded chips may recognize a
        date using "00" as the year 1900 rather than the year 2000.  This
        could result in a system failure or miscalculations causing
        disruptions of operations, including, among other things, a
        temporary inability to process transactions, send invoices, or
        engage in similar normal business activities.

             Based on recent assessments, the Company determined that it
        will be required to modify or replace significant portions of its
        software and certain hardware so that those systems will properly
        utilize dates beyond December 31, 1999.  The Company presently
        believes that with modifications or replacements of existing
        software and certain hardware, the Year 2000 Issue can be
        mitigated.  However, if such modifications and replacements are
        not made, or are not completed timely, the Year 2000 Issue could
        have a material impact on the operations of the Company.

             The Company's plan to resolve the Year 2000 Issue involves
        the following four phases:  assessment, remediation, testing, and
        implementation.  To date, the Company has fully completed its
        assessment of all systems that could be significantly affected by
        the Year 2000.  The completed assessment indicated that most of
        the Company's significant information technology systems could be
        affected.  That assessment also indicated that there was little,
        if any, risk associated with the production and manufacturing
        systems.  Further, the Company has determined that there is no
        risk with respect to the products it has sold and continues to
        sell.  In addition, the Company has gathered information about the
        Year 2000 compliance status of its significant suppliers and
        continues to monitor their compliance.

             For its information technology exposures, the Company has
        decided to completely replace the existing software and associated
        hardware.  To date, the Company has installed the new information
        systems at its Tonawanda, New York facility, which includes the
        corporate headquarters, and is in the final stages of testing and
        implementation.  This process is expected to be completed prior to
        December 31, 1998.  The Company anticipates implementing the new
        systems for its other locations beginning January 1, 1999, with an
        expected completion date of not later than March 31, 1999.

             The Company has queried its significant suppliers that do not
        share information systems with the Company (external agents).  To
        date, the Company is not aware of any external agent with a Year
        2000 issue that would materially impact the Company's results of
        operations, liquidity, or capital resources.  However, the Company
        has no means of ensuring that external agents will be Year 2000
        ready.  The inability of external agents to complete their Year
        2000 resolution process in a timely fashion could materially
        impact the Company.  The effect of non-compliance by external
        agents is not determinable. 

             The Company will utilize both internal and external resources
        to replace, test, and implement the software and certain hardware
        for Year 2000 modifications.  The total cost of the Year 2000
        project is estimated at $950,000, which includes $723,000 for the
        purchase of new software and hardware that will be capitalized and
        $227,000 that will be expensed and incurred.  To date, the Company
        has incurred approximately $720,000 ($60,000 expensed and $660,000
        capitalized for new systems and equipment), related to all phases
        of the Year 2000 project.

             Management of the Company believes it has an effective
        program in place to resolve the Year 2000 issue in a timely
        manner.  As noted above, the Company has not yet completed all
        necessary phases of the Year 2000 program.  In the event that the
        Company does not complete any additional phases, the Company would
        be unable to take customer orders, manufacture and ship products,
        invoice customers or collect payments.  In addition, disruptions
        in the economy generally resulting from Year 2000 issues could
        also materially adversely affect the Company.  The amount of
        potential liability and lost revenue cannot be reasonably
        estimated at this time.

             The Company currently has no contingency plans in place in
        the event it does not complete all phases of the Year 2000
        program.  The Company plans to evaluate the status of completion
        in March 1999 and determine whether such a plan is necessary.<PAGE>

        PART II - OTHER INFORMATION

        Item 1.  Legal Proceedings

             a.   Federal Proceedings and Related Matters

                  Reference is made to the information concerning lawsuits
                  filed by General Refractories Company and Arden
                  Architectural Specialties, Inc. against the Company
                  contained in Note 3(b)(i) of the Notes to Consolidated
                  Condensed Financial Statements included in this Form 10-Q.

             b.   International Oxide Fusion, Inc. v. Exolon-ESK Company
                  and Exolon-ESK Company of Canada, Ltd.

                  Reference is made to the information concerning the
                  lawsuit filed by International Oxide Fusion, Inc.
                  against Exolon-ESK Company and Exolon-ESK Company of
                  Canada, Ltd. contained in Note 3(b)(ii) of the Notes to
                  Consolidated Condensed Financial Statements included in
                  this Form 10-Q.

             c.   The Exolon-ESK Company of Canada, Ltd. v. Theeb, Ltd.
                  and Edward J. Bielawski

                  Reference is made to the information concerning a
                  lawsuit filed against Theeb, Ltd. and Edward J.
                  Bielawski contained in Note 3(b)(ii) of the Notes to
                  Consolidated Condensed Financial Statements included in
                  this Form 10-Q.

             d.   Exolon-ESK Company and Exolon-ESK Company of Canada,
                  Ltd. v. Michael Perrotto, et al.

                  Reference is made to the information concerning the
                  Perrotto case contained in Note 3(b)(ii) of the Notes to
                  Consolidated Condensed Financial Statements included in
                  this Form 10-Q, which is hereby incorporated herein by
                  reference.

        Item 2.  Change in Securities

             None

        Item 3.  Defaults Upon Senior Securities

             None

        Item 4.  Submission of Matters to a Vote of Security Holders

             None

        Item 5.  Other Information

             The Board of Directors of Exolon-ESK Company on September 14,
             1998 appointed J. Fred Silver as President.<PAGE>

        Item 6.  Exhibits and Reports on Form 8-K

             The following exhibits and reports are included/incorporated
             by reference herein:

             (a)   Exhibits

             27   Financial Data Schedule

             (b)   Reports on Form 8-K
         
                         None


                                     SIGNATURE

             Pursuant to the requirements of the Securities Exchange Act
        of 1934, the registrant has duly caused this report to be signed
        on its behalf by the undersigned thereunto duly authorized.



        EXOLON-ESK COMPANY


        S/J. Fred Silver
        President and Chief Executive Officer



        S/Michael Bieger
        Vice President Finance and 
        Chief Financial Officer




        Date:     November 11, 1998