UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D C  20549
                                   FORM 10-Q



(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     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
     For the transition period from                to               


                          Commission File Number 1-1463


                          UNION CARBIDE CORPORATION               
            (Exact name of registrant as specified in its charter)


            New York                                           13-1421730    
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)


 39 Old Ridgebury Road,  Danbury, CT                           06817-0001
(Address of principal executive offices)                       (Zip Code)


                                 203-794-2000                    
               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 _______


Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practicable date.

           Class                               Outstanding at October 31, 1998
Common Stock, $1 par value                             132,885,974 shares


              Total number of sequentially numbered pages in this filing,
                including exhibits thereto:  26
<PAGE>

UNION CARBIDE CORPORATION AND SUBSIDIARIES

                                     INDEX


PART I. FINANCIAL INFORMATION

                                                                         PAGE
  Financial Statements

    Condensed Consolidated Statement of Income - 
      Quarter ended September 30, 1998 and 1997....................        3

    Condensed Consolidated Statement of Income - 
      Nine months ended September 30, 1998 and 1997................        4

    Condensed Consolidated Balance Sheet - 
      September 30, 1998 and December 31, 1997.....................        5

    Condensed Consolidated Statement of Cash Flows -
      Nine months ended September 30, 1998 and 1997................        6

  Notes to Condensed Consolidated Financial Statements.............       7-12

  Management's Discussion and Analysis of Financial Condition
    and Results of Operations......................................      13-22


PART II. OTHER INFORMATION

  Item 1.  Legal Proceedings.......................................       23

  Item 6.  Exhibits and Reports on Form 8-K........................       23

  Signature........................................................       24

  Exhibit Index....................................................       25


Cautionary statement for the purposes of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995:  All statements in this 
quarterly report on Form 10-Q that do not reflect historical information are 
forward looking statements within the meaning of the Private Securities 
Litigation Reform Act of 1995.  Forward looking statements include statements 
concerning plans; objectives; strategies; anticipated future events or 
performance; sales, cost, expense and earnings expectations; the Year 2000 
issue; the euro and any other statements which do not reflect historical 
information.  Such forward looking statements are subject to risks and 
uncertainties.  Important factors that could cause actual results to differ 
materially from those discussed in such forward looking statements include the 
supply/demand balance for the corporation's products; customer inventory 
levels; competitive pricing pressures; feedstock costs; changes in industry 
production capacities and operating rates; currency exchange rates; interest 
rates; global economic conditions, particularly in Asia; disruption in 
railroad and other transportation facilities; competitive technology 
positions; failure by the corporation to achieve technology objectives, 
achieve cost reduction targets or complete projects on schedule; and inability 
to obtain new customers or retain existing ones.
<PAGE>

                        PART I. FINANCIAL INFORMATION
<TABLE>
                  UNION CARBIDE CORPORATION AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
                                                         Millions of dollars
                                                     (Except per share figures)
                                                       Quarter ended Sept. 30, 
                                                           1998        1997
<S>                                                      <C>         <C>
NET SALES                                                $ 1,350     $ 1,659

  Cost of sales, exclusive of depreciation and
    amortization                                           1,036       1,199
  Research and development                                    34          37
  Selling, administration and other expenses(a)               78          82
  Depreciation and amortization                               95          87
  Partnership income (loss)                                  (46)         28
  Net gain from settlement of UNIPOL Systems
    business litigation                                      118           -
  Other income - net                                          11           9

INCOME BEFORE INTEREST EXPENSE AND PROVISION FOR
  INCOME TAXES                                               190         291
  Interest expense                                            28          19

INCOME BEFORE PROVISION FOR INCOME TAXES                     162         272
  Provision for income taxes                                  58          83

INCOME OF CONSOLIDATED COMPANIES AND PARTNERSHIPS            104         189
  Minority interest                                            -           5
  Loss from corporate investments carried at equity           28           3

NET INCOME                                                    76         181
  Preferred stock dividend, net of income taxes                -           2

NET INCOME - COMMON STOCKHOLDERS                         $    76     $   179

Earnings per common share
  Basic                                                  $  0.56     $  1.34
  Diluted                                                $  0.55     $  1.18
Cash dividends declared per common share                 $  0.2250   $  0.4125

           

(a) Selling, administration and other expenses include:
      Selling                                            $    25     $    31
      Administration                                          26          31
      Other expenses                                          27          20
                                                         $    78     $    82

<FN>
The Notes to Condensed Consolidated Financial Statements on Pages 7 through 12 
should be read in conjunction with this statement.
</TABLE>
<PAGE>
<TABLE>
                    UNION CARBIDE CORPORATION AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
                                                         Millions of dollars
                                                     (Except per share figures)
                                                    Nine months ended Sept. 30,
                                                           1998        1997
<S>                                                      <C>         <C>
NET SALES                                                $ 4,370     $ 4,963

  Cost of sales, exclusive of depreciation and
    amortization                                           3,284       3,650
  Research and development                                   107         118
  Selling, administration and other expenses(a)              234         237
  Depreciation and amortization                              288         256
  Partnership income                                          18         100
  Net gain from settlement of UNIPOL Systems
    business litigation                                      118           -
  Other income - net                                          32          27

INCOME BEFORE INTEREST EXPENSE AND PROVISION FOR
  INCOME TAXES                                               625         829
  Interest expense                                            84          57

INCOME BEFORE PROVISION FOR INCOME TAXES                     541         772
  Provision for income taxes                                 168         228

INCOME OF CONSOLIDATED COMPANIES AND PARTNERSHIPS            373         544
  Minority interest                                            2          13
  Loss from corporate investments carried at equity           35           2

NET INCOME                                                   336         529
  Preferred stock dividend, net of income taxes                -           7

NET INCOME - COMMON STOCKHOLDERS                         $   336     $   522

Earnings per common share
  Basic                                                  $  2.47     $  3.97
  Diluted                                                $  2.41     $  3.49
Cash dividends declared per common share                 $  0.6750   $  0.7875

           

(a) Selling, administration and other expenses include:
      Selling                                            $    74     $    93
      Administration                                          84          94
      Other expenses                                          76          50
                                                         $   234     $   237

<FN>
The Notes to Condensed Consolidated Financial Statements on Pages 7 through 12 
should be read in conjunction with this statement.
</TABLE>
<PAGE>
<TABLE>
                 UNION CARBIDE CORPORATION AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
                                                     Millions of dollars 
                                                     Sept. 30,  Dec. 31,
                                                        1998      1997  

ASSETS
<S>                                                   <C>        <C>
  Cash and cash equivalents                           $   45     $   20
  Notes and accounts receivable                          920        993
  Inventories                                            602        604
  Other current assets                                   284        249
  Total current assets                                 1,851      1,866

  Property, plant and equipment                        8,209      7,707
  Less: Accumulated depreciation                       4,144      3,927
  Net fixed assets                                     4,065      3,780

  Companies carried at equity                            639        690
  Other investments and advances                          64         73
  Total investments and advances                         703        763

  Other assets                                           456        555

  Total assets                                        $7,075     $6,964


LIABILITIES AND STOCKHOLDERS' EQUITY
  Accounts payable                                    $  234     $  273
  Short-term debt and current portion of
    long-term debt                                       369        429
  Accrued income and other taxes                         117         75
  Other accrued liabilities                              688        727
  Total current liabilities                            1,408      1,504

  Long-term debt                                       1,703      1,458
  Postretirement benefit obligation                      447        464
  Other long-term obligations                            641        738
  Deferred credits                                       468        419
  Minority stockholders' equity in consolidated
    subsidiaries                                          36         33
  Stockholders' equity:
    Common stock - authorized - 500,000,000 shares
                 - issued     - 154,660,805 shares
                     (154,609,669 shares in 1997)        155        155
    Additional paid-in capital                            54         47
    Other equity adjustments                              (3)        (3)
    Retained earnings                                  3,319      3,074
    Accumulated other comprehensive loss                (134)      (101)
    Unearned employee compensation - ESOP                (68)       (80)
    Less: Treasury stock, at cost-21,903,937 shares
                (17,666,164 shares in 1997)              951        744
  Total stockholders' equity                           2,372      2,348
  Total liabilities and stockholders' equity          $7,075     $6,964
<FM>
The Notes to Condensed Consolidated Financial Statements on Pages 7 through 12 
should be read in conjunction with this statement.
</TABLE>
<PAGE>
<TABLE>
                 UNION CARBIDE CORPORATION AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
                                                    Millions of dollars
                                                Nine months ended Sept. 30,
                                                     1998         1997 
                                                  Increase (decrease) in
                                                cash and cash equivalents
OPERATIONS
<S>                                                 <C>          <C>
  Net income                                        $ 336        $ 529 
  Noncash charges (credits) to net income 
    Depreciation and amortization                     288          256 
    Deferred income taxes                              93           61 
    Other                                             142          (35) 
  Increase in working capital(a)                      (61)         (67)
  Long-term assets and liabilities                    (55)         (14)
Cash Flow From Operations                             743          730
INVESTING
  Capital expenditures                               (571)        (543) 
  Investments, advances and acquisitions
    (excluding cash acquired)                         (30)         (54) 
  Sales of fixed and other assets                       7            4
Cash Flow Used for Investing                         (594)        (593)
FINANCING
  Change in short-term debt (3 months or less)        (70)         (48)  
  Proceeds from short-term debt                        22           32
  Repayments of short-term debt                       (11)           -
  Proceeds from long-term debt                        248           14
  Repayments of long-term debt                         (5)         (28)
  Issuance of common stock                             34           36 
  Purchase of common stock                           (258)        (235)
  Proceeds from subsidiary preferred stock              -          246
  Payment of dividends                                (92)        (103)
  Other                                                 9          (21)
Cash Flow Used for Financing                         (123)        (107)
  Effect of exchange rate changes on cash and
  cash equivalents                                     (1)          (1)
  Change in cash and cash equivalents                  25           29
  Cash and cash equivalents beginning-of-period        20           57 
Cash and cash equivalents end-of-period             $  45        $  86 

Cash paid for interest and income taxes
  Interest (net of amount capitalized)              $  73        $  45 
  Income taxes                                      $  34        $  83 

_____________

(a) Net change in certain components of working capital (excluding 
non-cash expenditures):

(Increase) decrease in current assets
  Notes and accounts receivable                 $  71        $ (21)
  Inventories                                       2          (15) 
  Other current assets                            (33)           0 
Decrease in payables and accruals                (101)         (31)
Increase in working capital                     $ (61)       $ (67)

<FN>
The Notes to Condensed Consolidated Financial Statements on Pages 7 through 12 
should be read in conjunction with this statement.
</TABLE>
<PAGE>

                    UNION CARBIDE CORPORATION AND SUBSIDIARIES
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  Consolidated Financial Statements

In the opinion of management, the accompanying unaudited condensed 
consolidated financial statements include all adjustments necessary for a 
fair statement of the results for the interim periods.  These adjustments 
consist of only normal recurring adjustments.  The accompanying 
statements should be read in conjunction with the Notes to Financial 
Statements of Union Carbide Corporation and Subsidiaries ("the 
corporation" or "UCC") in the 1997 annual report to stockholders.

Unrealized gains and losses resulting from translating foreign 
subsidiaries' assets and liabilities into U.S. dollars generally are 
recognized as part of "Comprehensive income", as described in Note 2, and 
are included in "Accumulated other comprehensive loss" on the Condensed 
Consolidated Balance Sheet until such time as the subsidiary is sold or 
substantially or completely liquidated.  Translation gains and losses 
relating to operations located in Latin American countries, where 
hyperinflation exists, and to international operations using the U.S. 
dollar as their functional currency are included in the Condensed 
Consolidated Statement of Income.  Effective January 1, 1998, Brazil is 
no longer considered a hyperinflationary economy.

Marketable securities have been reclassified from "Cash and cash 
equivalents" to "Other current assets" to conform to the current period's 
presentation.


2.  Comprehensive Income

In the first quarter of 1998, the corporation adopted Statement of 
Financial Accounting Standards ("Statement") No. 130, "Reporting 
Comprehensive Income," which establishes standards for reporting and 
displaying comprehensive income and its components in a full set of 
general-purpose financial statements.  The financial statements for 
earlier periods have been reclassified to reflect application of the 
provisions of Statement No. 130. 

(In millions of dollars)                   Quarter Ended   Nine Months Ended
                                              Sept. 30,        Sept. 30,   
                                             1998    1997      1998    1997

Net income                                  $  76   $ 181     $ 336   $ 529
Other comprehensive income/(loss):
  Unrealized gains/(losses) on 
    available-for-sale securities, net of 
    reclassification adjustment, net of tax    (3)      3         1       2
  Foreign currency translation adjustments    (26)    (35)      (34)    (52)

Total comprehensive income                  $  47   $ 149     $ 303   $ 479

<PAGE>

3.  Earnings Per Share
<TABLE>
<CAPTION>
 (In millions of dollars                         Quarter Ended Sept. 30,  Nine Months Ended Sept. 30,
  except per share amounts)                        1998         1997           1998         1997
Basic -
<S>                                               <C>          <C>            <C>          <C>
  Net income                                      $  76        $ 181          $ 336        $ 529
      Less: Dividends on ESOP shares, pre-tax         -            3              -            9
            Appreciation on ESOP shares 
              redeemed for cash                       -           12              -           24
  Net income - common stockholders,
    for basic calculation                         $  76        $ 166          $ 336        $ 496

  Weighted average number of shares 
    outstanding for basic calculation          134,286,957  123,957,271    135,755,666  125,008,093

  Earnings per share                              $0.56        $1.34          $2.47        $3.97

Diluted -
  Net income - common stockholders, 
    for basic calculation                         $  76        $ 166          $ 336        $ 496
      Add: Dividends on ESOP shares, pre-tax          -            3              -            9
  Net income - common stockholders,
    for diluted calculation                       $  76        $ 169          $ 336        $ 505

  Weighted average number of shares 
    outstanding for basic calculation          134,286,957  123,957,271    135,755,666  125,008,093
      Add: Effect of stock options               3,258,418    4,195,877      3,521,861    4,169,143
           Shares issuable upon conversion of 
             UCC's convertible ESOP shares               -   15,473,657              -   15,638,615
                                               137,545,375  143,626,805    139,277,527  144,815,851

  Earnings per share                              $0.55        $1.18          $2.41        $3.49
</TABLE>

4.  Inventories
                                                     Millions of dollars  
                                                    Sept. 30,     Dec. 31,
                                                       1998         1997  
Raw materials and supplies                            $   110      $   135
Work in process                                            42           62
Finished goods                                            450          407
                                                      $   602      $   604


5.  Long-Term Debt

In June 1998 the corporation completed a $250 million public offering of 
6.25 percent debentures due June 15, 2003.  These debentures pay interest 
semi-annually in June and December.


6.  Common Stock

Since inception of its 60 million common share repurchase program through 
September 30, 1998, the corporation has repurchased 54.9 million shares 
(5.6 million during the first nine months of 1998) at an average effective 
price of $35.78 per share.  The corporation intends to acquire additional 
shares from time to time at prevailing market prices, at a rate consistent 
with the combination of corporate cash flow and market conditions.  

<PAGE>

In conjunction with the corporation's common stock buyback program, put 
options were sold in a series of private placements entitling the holders 
to sell 12.9 million shares of common stock to UCC, at specified prices 
upon exercise of the options.  Since inception of this program, through 
September 30, 1998, options representing 9.8 million common shares have 
expired unexercised, while options representing 3.1 million shares were 
exercised for $129 million, or an average price of $40.94 per share.  
There were no outstanding options at September 30, 1998.

Premiums received since the inception of the program, recorded as 
additional paid-in capital, have reduced the average price of repurchased 
shares from $36.03 per share to $35.78 per share.


7.  Settlement of UNIPOL Systems Business Litigation

During the third quarter of 1998, the corporation reached a favorable 
settlement on a litigation claim of the UNIPOL Systems business.  The 
pre-tax gain associated with this settlement was $118 million ($72 million 
after-tax), net of related expenses.


8.  Partnership Income (Loss)

The corporation recorded a $53 million pre-tax charge ($38 million after-
tax), to recognize losses associated with Aspell Polymeres, SNC, the 
corporation's partnership with Elf AtoChem, in France.


9.  Commitments and Contingencies

The corporation has entered into three major agreements for the purchase 
of ethylene-related products and two other purchase agreements in the U.S. 
and Canada.  The net present value of the fixed and determinable portion 
of these obligations at September 30, 1998 totaled $254 million.

The corporation is subject to loss contingencies resulting from 
environmental laws and regulations, which include obligations to remove or 
remediate the effects on the environment of the disposal or release of 
certain wastes and substances at various sites.  The corporation has 
established accruals in current dollars for those hazardous waste sites 
where it is probable that a loss has been incurred and the amount of the 
loss can be reasonably estimated.  The reliability and precision of the 
loss estimates are affected by numerous factors, such as different stages 
of site evaluation, the allocation of responsibility among potentially 
responsible parties and the assertion of additional claims.  The 
corporation adjusts its accruals as new remediation requirements are 
defined, as information becomes available permitting reasonable estimates 
to be made, and to reflect new and changing facts.

At September 30, 1998, the corporation had established environmental 
remediation accruals in the amount of $229 million.  These accruals have two 
components, estimated future expenditures for site investigation and cleanup 
and estimated future expenditures for closure and postclosure activities.  In 
addition, the corporation had environmental loss contingencies of 
$124 million.

<PAGE>

The corporation has sole responsibility for the remediation of 
approximately 40 percent of its environmental sites.  These sites are well 
advanced in the investigation and cleanup stage.  The corporation's 
environmental accruals at September 30, 1998 included $187 million for 
these sites, of which $82 million was for estimated future expenditures 
for site investigation and cleanup and $105 million was for estimated 
future expenditures for closure and postclosure activities.  In addition, 
$69 million of the corporation's environmental loss contingencies related 
to these sites.  The two sites with the largest total potential cost to 
the corporation are nonoperating sites.  Of the above accruals, these 
sites accounted for $40 million, of which $21 million was for estimated 
future expenditures for site investigation and cleanup and $19 million was 
for estimated future expenditures for closure and postclosure activities.  
In addition, $44 million of the above environmental loss contingencies 
related to these sites.

The corporation does not have sole responsibility at the remainder of its 
environmental sites.  All of these sites are in the investigation and 
cleanup stage.  The corporation's environmental accruals at September 30, 
1998 included $42 million for estimated future expenditures for site 
investigation and cleanup at these sites.  In addition, $55 million of the 
corporation's environmental loss contingencies related to these sites.  
The largest of these sites is also a nonoperating site.  Of the above 
accruals, this site accounted for $10 million for estimated future 
expenditures for site investigation and cleanup.  In addition, $3 million 
of the above environmental loss contingencies related to this site.

In 1997, worldwide expenses of continuing operations related to 
environmental protection for compliance with Federal, state and local laws 
regulating solid and hazardous wastes and discharge of materials to air 
and water, as well as for waste site remedial activities, totaled $100 
million.  Expenses in 1996 and 1995 were $110 million and $138 million, 
respectively.  While estimates of the costs of environmental protection 
for 1998 are necessarily imprecise, the corporation estimates that the 
level of these expenses will be similar to that experienced in 1997.

The corporation has severally guaranteed 45 percent (approximately 
$596 million at September 30, 1998) of EQUATE Petrochemical Company's 
("EQUATE") debt and working capital financing needs until certain 
completion and financial tests are achieved.  If these tests are met, a 
$54 million several guarantee will provide ongoing support thereafter.  
The corporation also severally guaranteed certain sales volume targets 
until EQUATE's sales capabilities are proved.  In addition, the 
corporation has pledged its shares in EQUATE as security for EQUATE's 
debt.  The corporation has political risk insurance coverage for its 
equity investment and, through March 31, 1999, substantially all of its 
guarantee of EQUATE's debt.

The corporation had additional contingent obligations at September 30, 
1998 of $54 million, of which $29 million related to guarantees of debt.

The corporation is one of a number of defendants named in approximately 
4,900 lawsuits in both Federal and state courts, some of which have more 
than one plaintiff, involving silicone breast implants.  The corporation 
was not a manufacturer of breast implants but did supply generic bulk 
silicone materials to certain manufacturers.  Also, the corporation in

<PAGE>

1990 acquired and in 1992 divested the stock of a small specialty 
silicones company that, among other things, supplied silicone gel 
intermediates and silicone dispersions for breast implants.  In 1993, 
most of the suits that were brought in Federal courts were consolidated 
for pre-trial purposes in the United States District Court, Northern 
District of Alabama.

In 1995, the District Court approved a settlement program proposed by 
certain defendants, including the corporation.  In August 1997, the court 
ruled that all claims based solely on the supply of generic bulk silicone 
materials should be dismissed against the corporation.  That decision is 
final with respect to cases in Federal courts, but does not affect the 
corporation's participation in the settlement program.  The corporation 
believes that after probable insurance recovery neither the settlement nor 
litigation outside the settlement will have a material adverse effect on 
the consolidated financial position of the corporation.

In addition to the above, the corporation and its consolidated subsidiaries 
are involved in a number of legal proceedings and claims with both private 
and governmental parties.  These cover a wide range of matters including, 
but not limited to, product liability; trade regulation; governmental 
regulatory proceedings; health, safety and environmental matters; 
employment; patents; contracts and taxes.  In some of these legal 
proceedings and claims, the cost of remedies that may be sought or damages 
claimed is substantial.

The corporation has recorded nonenvironmental litigation accruals of 
$126 million, and related insurance recovery receivables of $109 million.  
At September 30, 1998, the corporation had nonenvironmental litigation 
loss contingencies of $72 million. 

While it is impossible at this time to determine with certainty the 
ultimate outcome of any of the legal proceedings and claims referred to in 
this note, management believes that adequate provisions have been made for 
probable losses with respect thereto and that such ultimate outcome, after 
provisions therefor, will not have a material adverse effect on the 
consolidated financial position of the corporation, but could have a 
material effect on consolidated results of operations in a given quarter 
or year.  Should any losses be sustained in connection with any of such 
legal proceedings and claims, in excess of provisions therefor, they will 
be charged to income in the future.


10.  Subsequent Event

On October 26, 1998, the corporation issued $110 million in floating rate 
public notes maturing in April 2000.  The notes bear interest at a rate 
which will be reset quarterly at the three-month London interbank offered 
rate, plus 0.65 percent.  Interest on the notes will be paid quarterly in 
January, April, July and October of each year.  The proceeds of this 
offering were used for general corporate purposes and to repay certain 
short-term debt.

<PAGE>

11.  Other Accounting Changes

Effective January 1, 1998 the corporation adopted Statement No. 131, 
"Disclosures About Segments of an Enterprise and Related Information," and 
Statement No. 132, "Employers' Disclosures about Pensions and Other 
Postretirement Benefits."  These Statements address presentation and 
disclosure matters and will have no impact on the corporation's financial 
position or results of operations.  As required by Statement 131 and 
Statement 132, compliance with the respective reporting disclosures will 
be reflected in the corporation's 1998 Annual Report on Form 10-K.

In 1998, the Financial Accounting Standards Board issued Statement 
No. 133, "Accounting for Derivative Instruments and Hedging Activities."  
It requires that an entity recognize all derivative instruments as either 
assets or liabilities in the statement of financial position and measure 
those instruments at fair value.  This statement is effective for all 
fiscal quarters of fiscal years beginning after June 15, 1999.  The 
corporation is currently evaluating the effect this statement will have on 
its financial position and results of operations in the period of 
adoption.

In 1998, the American Institute of Certified Public Accountants ("AICPA") 
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of 
Computer Software Developed or Obtained for Internal Use."  SOP 98-1 is 
effective for financial statements for fiscal years beginning after 
December 15, 1998.  The corporation anticipates that the effect of this 
adoption will not be material to the results of operations in the period 
in which the SOP is adopted.

Also in 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-up 
Activities."  This SOP requires the expensing of certain costs such as pre-
operating expenses and organizational costs associated with the corporation's 
start-up activities, and is effective for years beginning after December 15, 
1998.  The effect of adoption is required to be accounted for as a cumulative 
effect of change in accounting principle.  The corporation anticipates that 
the amount recognized as a cumulative effect of change in accounting principle 
could range between $15 million and $25 million, depending on the period of 
adoption.

The corporation may consider early adoption of one or more of the 
preceding pronouncements.

<PAGE>

              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                          AND RESULTS OF OPERATIONS

Overview

The corporation reported third quarter 1998 net income available to common 
stockholders of $76 million, or $0.55 per diluted share, ($0.56 per basic 
share). For the first nine months of 1998, net income available to common 
stockholders was $336 million, or $2.41 per diluted share, ($2.47 per basic 
share).  

For the corresponding quarter in 1997, the corporation reported net income 
available to common stockholders of $179 million, or $1.18 per diluted share, 
($1.34 per basic share).  For the first nine months of 1997, net income 
available to common stockholders was $522 million, or $3.49 per diluted share, 
($3.97 per basic share).

The corporation's results were affected most significantly by declining 
average selling prices, particularly in the Basic Chemicals & Polymers 
segment.  These declines reflect the overall deterioration of the 
supply/demand balance for the chemical industry, coupled with the global 
market's response to the depressed Asian economy.  Customer volumes also 
declined largely due to a longer than anticipated shutdown of the 
corporation's largest olefins facilities at Taft, La. in connection with 
planned maintenance (a plant turnaround) and expansion.  During the plant 
turnaround, the corporation purchased rather than produced ethylene, thereby 
eliminating the production and sale of the associated hydrocarbon co-products.  
Additionally, the corporation incurred certain costs, not incurred in the 
prior year, which were associated with the plant turnaround.  In the third 
quarter of 1998, Partnership income (loss) was lower than in the same period 
of the prior year, principally the result of recognition of losses associated 
with Aspell Polymeres, SNC, ("Aspell") and reduced earnings from UOP LLC 
("UOP").  Although the corporation's income from operations declined from the 
comparable periods in the prior year, results were positively impacted by a 
net gain associated with the favorable settlement of a litigation claim 
related to the UNIPOL Systems business. 

The fourth quarter is anticipated to be a challenge for the corporation due to 
continuing deterioration in average selling prices, particularly in the Basic 
Chemicals & Polymers segment.  Customer volumes will likely reflect some 
seasonal weakness in the fourth quarter.  Likewise, the corporation expects to 
experience some seasonal increases in raw material costs, which would reduce 
the variable margin (net sales less variable manufacturing and distribution 
costs) close to historic lows for Basic Chemicals & Polymers products.  The 
Asian economic decline will continue to adversely impact average selling 
prices and volumes in the Specialties & Intermediates segment, particularly in 
the solvents, intermediates and monomers and latex businesses.  Licensing is 
expected to remain consistent with third quarter levels.  It is anticipated 
that some improvement in our partnerships will occur as UOP's earnings improve 
modestly from the unusually depressed third quarter 1998 levels.  Income from 
corporate investments carried at equity is expected to remain close to third 
quarter levels with some improvement in EQUATE being offset by continuing 
declines in Polimeri Europa as average selling prices decline.  The olefins 
expansion at the Taft, La. facility is not expected to be complete until the 
middle of the fourth quarter and therefore, the fourth quarter will bear some

<PAGE>

additional costs over the same period in 1997.  Finally, the corporation is in 
the process of implementing the largest and most complex phase of its 
information technology systems project.  Additional costs and temporary 
business interruptions may be experienced as the implementation proceeds 
through the fourth quarter of 1998.

The 1997 Union Carbide Corporation EPS Incentive Plan is designed to grant 
awards to a limited number of senior managers if the corporation achieves 
$4.00 or more diluted earnings per share performance during 1999 and 2000.  
The plan requires these senior managers to put an amount equivalent to a 
portion of their annual base pay at risk, should diluted earnings per share 
not equal or exceed $4.00 in the year 2000.  Because of the Asian crisis, 
volume and average selling price pressures and other reasons, it is not likely 
that the goal of $4.00 per diluted share is attainable in 1999, and there is 
increasing uncertainty as to whether the goal is attainable in 2000.  Failure 
to meet the requirements of the plan will result in forfeiture of the amounts 
at risk.

The corporation regularly reviews its assets, including investments, with the 
objective of maximizing the deployment of resources.  In this regard, 
strategies or transactions implemented could result in material nonrecurring 
gains and losses.

Results of Operations

Net sales decreased 18.6 percent in the third quarter and 11.9 percent in the 
first nine months of 1998, compared to the same periods in 1997.  Average 
selling prices declined 13.4 percent for the third quarter and 8.8 percent for 
the first nine months of 1998 compared to the same periods in 1997.  Ethylene 
glycol and polyethylene, part of the Basic Chemicals & Polymers segment, 
experienced the most significant declines in average selling prices; however, 
average selling prices for a majority of the corporation's Specialties & 
Intermediates products were also affected by the continued weakness in Asian 
markets.  Customer volume decreased 5.9 percent in the third quarter of 1998 
compared to the third quarter of 1997, principally due to the reduced 
production and sale of hydrocarbon co-products.  Volumes decreased 3.5 percent 
for the first nine months of 1998 as compared to similar periods in 1997, 
reflecting reduced shipments in the Basic Chemicals & Polymers segment, due in 
part to distribution problems in the first half of the year and reduced 
hydrocarbon co-product sales in the third quarter of 1998.  Additionally, the 
corporation's solvents, intermediates and monomers product lines experienced 
lower volume due to reduced Asian demand.

Variable margin was 46.7 percent and 45.7 percent for the current three and 
nine month periods, respectively, compared to 45.0 percent and 43.9 percent, 
respectively, for the same periods in 1997.  These increases are related to 
changes in product mix within the Specialties & Intermediates segment toward 
the sale of higher margin items, offset by variable margin declines in the 
Basic Chemicals & Polymers products as average selling prices declined at a 
faster rate than raw material costs.

Gross margin (variable margin less fixed manufacturing and distribution 
costs), as a percent of sales, decreased to 23.3 percent from 27.7 percent for 
the third quarter of 1998 compared to the same quarter in 1997 and decreased 
to 24.9 percent from 26.5 percent for the nine months ended September 30, 1998 
compared to the same nine months of 1997.  These declines reflect certain 
costs associated with the plant turnaround at the Taft, La. facility.

<PAGE>

                           Industry Segments

The corporation's operations are classified into two main business segments, 
Specialties & Intermediates and Basic Chemicals & Polymers. The Specialties & 
Intermediates segment includes the corporation's specialty chemicals and 
polymers product lines, licensing and solvents and chemical intermediates.  
The Basic Chemicals & Polymers segment includes the corporation's ethylene 
and propylene manufacturing operations as well as the production of first 
level ethylene and propylene derivatives - polyethylene, polypropylene, 
ethylene oxide and ethylene glycol.  The corporation's noncore operations and 
financial transactions are included in the Other segment.

Information about the corporation's operations in its business segments for 
the third quarter and nine month periods of 1998 and 1997 follows. Sales of 
the Basic Chemicals & Polymers segment include intersegment sales, principally 
ethylene oxide, which are reflected at the estimated market value of the 
products transferred.  Operating profit (loss) represents income before 
interest expense and provision for income taxes.

                                            Quarter ended    Nine months ended
                                              Sept. 30,          Sept. 30,
Millions of dollars                         1998     1997      1998     1997 

                               Sales

Specialties & Intermediates                $  995   $1,141    $3,175   $3,402
Basic Chemicals & Polymers                    421      619     1,419    1,820
Intersegment Eliminations                     (66)    (101)     (224)    (259)
Total                                      $1,350   $1,659    $4,370   $4,963

                          Operating Profit (Loss)

Specialties & Intermediates                $  233   $  170    $  601   $  545 
Basic Chemicals & Polymers                    (13)     125        65      288
Other                                         (30)      (4)      (41)      (4)
Total                                      $  190   $  291    $  625   $  829

                   Depreciation and Amortization

Specialties & Intermediates                $   61   $   55    $  182   $  161
Basic Chemicals & Polymers                     34       32       106       95
Total                                      $   95   $   87    $  288   $  256

                        Capital Expenditures

Specialties & Intermediates                $  111   $  130    $  332   $  321
Basic Chemicals & Polymers                    103       85       239      222
Total                                      $  214   $  215    $  571   $  543

Net sales of the Specialties & Intermediates segment decreased $146 million, 
or 12.8 percent in the current quarter compared to the same quarter in 1997, 
and $227 million, or 6.7 percent in the current nine month period as compared 
to the same nine months of 1997.  For the three month period ended 
September 30, 1998, this segment's average selling price decreased 7.2 percent 
and volume declined 6.0 percent as compared to the same period in 1997.  For 
the first nine months of 1998, average selling prices decreased 4.4 percent 
while volume declined 2.3 percent as compared to the same period of 1997.

<PAGE>

Volume and average selling prices decreased for both the three and nine month 
periods primarily in the solvents, intermediates and monomers product lines, 
where the impact of the Asian economic downturn was the greatest.  Operating 
profit for the third quarter of 1998 improved by $63 million or 37.1 percent 
when compared to the same quarter of 1997; and improved $56 million or 10.3 
percent for the first nine months of 1998 versus the same nine months in 1997.  
Included in operating profit for both the three and nine month periods in 1998 
was a nonrecurring net gain of $118 million related to the favorable 
settlement of a UNIPOL Systems business litigation and a $53 million reduction 
in earnings related to losses associated with Aspell.

Net sales of the Basic Chemicals & Polymers segment decreased $198 million, or 
32.0 percent in the current quarter versus the same quarter of 1997 and 
$401 million, or 22.0 percent in the first nine months of 1998 compared to the 
first nine months of 1997.  These decreases were the result of a 27.2 percent 
and 19.4 percent decrease in average customer selling price, for the three and 
nine month periods ended September 30, 1998, respectively, compared to the 
same periods in 1997, as the chemical industry continues to move toward 
cyclical trough conditions.  Additionally, customer volume declined 5.9 
percent and 5.0 percent for the three and nine month periods ended September 
30, 1998, respectively, as compared to the same periods in 1997.  Operating 
profit (loss) declined from an operating profit of $125 million in the third 
quarter of 1997 to an operating loss of $13 million in the third quarter of 
1998.  Operating profit for the nine month period ended September 30, 1998 
declined $223 million or 77.4 percent, compared to the same period in 1997.  
Although operating profit was directly impacted by the reduction in sales and 
costs associated with the plant turnaround at the Taft, La. facility, further 
declines in operating profit were mitigated by lower raw material costs in 
1998 versus 1997.

The corporation's Other segment included a writedown of a long-term 
available-for-sale security and a reclassification, to a discontinued 
business, of an environmental accrual.

Depreciation and amortization increased $8 million to $95 million for the 
third quarter and $32 million to $288 million for the first nine months of 
1998, compared to similar periods in 1997.  The increases are principally the 
result of depreciation associated with completed capital projects.

Partnership income (loss) decreased $74 million and $82 million for the 
quarter and nine month periods ended September 30, 1998 compared to similar 
periods in 1997, respectively.  This decrease is the result of a decline in 
earnings of UOP, primarily related to unfavorable market conditions in Asia, 
Russia and the Middle East, decreased earnings in Petromont due to industry 
declines in average selling prices and a full nine months of costs, 
principally research and development, associated with Univation, compared to 
only six months of such costs in 1997.  Additionally, in the third quarter of 
1998, the corporation recognized losses of $53 million associated with Aspell.  

Interest expense increased $9 million to $28 million for the third quarter of 
1998 and increased $27 million to $84 million for the first nine months of 
1998 compared to the same periods in 1997, as the result of increased debt 
levels and a reduction in capitalized interest associated with the 
corporation's capital program.

<PAGE>

The corporation's effective income tax rate was 35.8 percent and 31.1 percent 
for the third quarter and first nine months of 1998, respectively, compared to 
30.5 percent and 29.5 percent for the same periods in 1997, respectively.  The 
increased rate for 1998 reflects additional tax associated with the net gain 
from the settlement of a UNIPOL Systems business litigation.

Loss from corporate investments carried at equity increased $25 million, from 
$3 million in the third quarter of 1997 to $28 million in the third quarter of 
1998.  For the first nine months of 1998 loss from corporate investments 
carried at equity was $35 million compared to $2 million for the same period 
of 1997.  Lower earnings in the three and nine month periods are mainly 
attributable to approximately $4 million of costs associated with the 
temporary outage of a government-owned transformer which supplies power to the 
EQUATE facility, coupled with declining average selling prices for Basic 
Chemicals & Polymers products in Asia and Europe, which affected operating 
results of both EQUATE and Polimeri Europa.

Estimates of future expenses related to environmental protection for 
compliance with Federal, state and local laws regulating solid and hazardous 
wastes and discharge of materials to air and water, as well as for waste site 
remedial activities have not changed materially since December 31, 1997.  The 
reliability and precision of the loss estimates are affected by numerous 
factors, such as different stages of site evaluation, the allocation of 
responsibility among potentially responsible parties and the assertion of 
additional claims.  The corporation's environmental exposures are discussed in 
more detail in the "Commitments and Contingencies" footnote to the financial 
statements on pages 9 through 11 of this report on Form 10-Q.

The corporation is named as one of a number of defendants in lawsuits 
involving silicone gel breast implants.  The corporation supplied bulk 
silicone materials to certain companies that at various times were involved in 
the manufacture of breast implants.  These cases are discussed in more detail 
in the "Commitments and Contingencies" footnote to the financial statements on 
pages 9 through 11 of this report on Form 10-Q.


Accounting Changes

Effective January 1, 1998 the corporation adopted Statement of Financial 
Accounting Standards ("Statement") No. 130, "Reporting Comprehensive Income," 
Statement No. 131, "Disclosures About Segments of an Enterprise and Related 
Information," and Statement No. 132, "Employers' Disclosures about Pensions 
and Other Postretirement Benefits."  These statements address presentation and 
disclosure matters and will have no impact on the corporation's financial 
position or results of operations.  The corporation has complied with the 
disclosure requirements of Statement 130 in the "Comprehensive Income" 
footnote to the financial statements on page 7 of this report on Form 10-Q.  
As required by Statement 131 and Statement 132, compliance with the respective 
reporting disclosures will be reflected in the corporation's 1998 Annual 
Report on Form 10-K.

In 1998, the Financial Accounting Standards Board issued Statement No. 133, 
"Accounting for Derivative Instruments and Hedging Activities."  It requires 
that an entity recognize all derivative instruments as either assets or 
liabilities in the statement of financial position and measure those 
instruments at fair value.  This statement is effective for all fiscal

<PAGE>

quarters of fiscal years beginning after June 15, 1999.  The corporation is 
currently evaluating the effect this statement will have on its financial 
position and results of operations in the period of adoption.

In 1998, the American Institute of Certified Public Accountants ("AICPA") 
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of 
Computer Software Developed or Obtained for Internal Use."  SOP 98-1 is 
effective for financial statements for fiscal years beginning after December 
15, 1998.  The corporation anticipates that the effect of this adoption will 
not be material to the results of operations in the period in which the SOP is 
adopted.

Also in 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-up 
Activities."  This SOP requires the expensing of certain costs such as pre-
operating expenses and organizational costs associated with the corporation's 
start-up activities, and is effective for years beginning after December 15, 
1998.  The effect of adoption is required to be accounted for as a cumulative 
effect of change in accounting principle.  The corporation anticipates that the 
amount recognized as a cumulative effect of change in accounting principle 
could range between $15 million and $25 million, depending on the period of 
adoption.

The corporation may consider early adoption of one or more of the preceding 
pronouncements.


Year 2000 Issue

Many of the corporation's older computer and process control systems use two 
digits to represent years, so they may interpret "00" as 1900 instead of 2000.  
This could result in errors or system failures.  The corporation has a 
comprehensive program to address its own systems affected by this issue, 
including hardware and software, and to assess the readiness of its customers 
and suppliers. 

Internal Efforts
The corporation has been working to ready its internal systems for several 
years.  Since 1995, the corporation has expended significant funds to replace 
most of its U.S. commercial computers with a single integrated advanced 
information system.  This project will make most of the corporation's 
commercial hardware and software systems Year 2000 ready and remains on 
schedule for completion by the end of 1998.

Finance and control operations of the new system were implemented in January 
1998, plant maintenance and material management systems are being implemented 
plant by plant, and supply chain operations will be implemented during the 
fourth quarter of 1998. Selected subsidiary and Canadian operations are 
scheduled to be implemented in the first half of 1999.

In a separate effort, the international computer infrastructure is scheduled 
for upgrade by the end of third quarter 1999.  Repairs to international 
commercial applications began in 1997 and are scheduled to be completed in the 
fourth quarter of 1998.

<PAGE>

Applications which provide environmental compliance reporting are scheduled 
for replacement by the end of the third quarter 1999.

A strategy for addressing the balance of domestic and international internal 
processes, including hardware, software and control systems is progressing.  
The corporation has essentially completed an inventory of affected systems.  
Necessary remediation work has been defined, prioritized and is underway. 


o  Commercial Systems
Remediation projects are under way for commercial computer systems in Human 
Resources, Health Safety and Environment, Engineering, Research and 
Development and other functional areas of the corporation.  All are 
scheduled for completion by the end of third quarter 1999.  Inventory and 
design work are complete in these areas.

o  Non-IT Systems
-  Manufacturing Units
The Year 2000 inventory of process control systems, logic controllers, 
process and laboratory analyzers and embedded devices is complete and 
remediation is proceeding.  Remediation is expected to be largely 
complete by the end of third quarter 1999.  In some cases, remediation 
will be done in the fourth quarter to avoid unplanned shutdowns.

Manufacturing units are being remediated and tested when planned major 
maintenance shutdowns afford such opportunity.  During the turnaround at 
the Taft, La. facility, potential Year 2000 problems were recently 
addressed and solutions tested. 

-  Other Business Systems 
Other business systems including office and medical equipment and 
building/site systems have been inventoried and prioritized.  Work to 
date indicates that fewer problems are anticipated in this area than 
originally expected.  Remediation is expected to be complete by the 
third quarter of 1999.

External Efforts
The corporation is also reviewing its external relationships to address 
potential year 2000 impacts arising from interfaces with customers, suppliers 
and service providers with whom the corporation has a significant 
relationship, as well as the corporation's partnerships and joint ventures.  
The corporation is presently communicating with its most significant suppliers 
and customers to assess their ability to meet their sales and purchasing 
obligations, as well as with its partnerships and joint ventures to assess
their readiness for the Year 2000, and will continue to monitor this into the
Year 2000. 

Expenditures
Expenditures (excluding the cost of internal personnel resources) for internal 
Year 2000 work and Year 2000 work associated with the corporation's vendors 
and suppliers, is expected to run between $50 and $60 million, over the life 
of the project, primarily affecting income in the period incurred.  All costs 
are anticipated to be funded through operations of the corporation.  
Approximately 55% of these costs are expected to relate to repairing or 
upgrading current systems and 45% to existing hardware and software 
replacement, excluding the commercial systems upgrades and the environmental 

<PAGE>

compliance project.  As of September 30, 1998, approximately $7 million of 
this amount has been incurred.  These estimates do not include costs
associated with the replacement of most of the corporation's U.S. and 
international commercial computer systems with a single integrated advanced 
information system, the environmental reporting project or Year 2000 issues 
which the corporation's partnerships and joint ventures may incur.

Risks and Contingency Plans
Failure to sufficiently remediate the Year 2000 problem in a timely fashion 
poses substantial risks for the corporation.  Reasonable worst-case scenarios 
include but are not limited to manufacturing system malfunctions, including 
shutdowns, and failure in the supply chain.  The extent of these potential 
risks is uncertain at this time, and will be better defined as the project 
proceeds.

Contingency plans are being discussed, will be developed beginning in the 
first quarter of 1999 and are planned to be in place, as required, by the end 
of the third quarter of 1999.  They will include consideration of alternative 
sources of supply, customer communication programs and plant and business 
response plans.

The corporation plans to complete its Year 2000 project prior to the 
Year 2000.  However, considerable work remains to be accomplished and 
unforeseen difficulties may arise that could adversely affect the ability to 
complete systems modifications correctly, completely, on time and/or within 
cost estimates.  In addition, there can be no assurance that customers, 
suppliers and service providers the corporation relies on, as well as the 
corporation's partnerships and joint ventures, will resolve their Year 2000 
issues accurately, thoroughly and on time.  Failure by the corporation or 
failure by the corporation's customers, suppliers, service providers, 
partnerships or joint ventures to complete the Year 2000 project by the Year 
2000 could have a material adverse affect on future operating results or 
financial condition of the corporation.

No significant information technology projects have been delayed due to the 
corporation's Year 2000 efforts. 


European Monetary Union

On January 1, 1999, eleven European Union member countries are scheduled to 
establish fixed conversion rates between their existing currencies ("legacy 
currencies") and one common currency, the euro.  The euro will then trade on 
currency exchanges and can be used in business transactions.  Beginning in 
January 2002, new euro-denominated bills and coins will be issued, and legacy 
currencies will be withdrawn from circulation.  The corporation believes that 
its financial systems and processes will be euro ready on January 1, 1999 and 
that the cost of any system conversions will not be material.  Although the 
corporation is still in the process of evaluating this conversion, the 
corporation does not expect the introduction of the euro to have a material 
effect on its industry segment businesses, consolidated results of operations 
or financial condition.

<PAGE>

Financial Condition - September 30, 1998 

Cash flow from operations for the first nine months of 1998 was $743 million, 
up from $730 million in the first nine months of 1997. The increase is 
principally the result of an increase in non-cash charges (credits) to 
net income, resulting from a $115 million decline in the combined 
results of partnerships and corporate investments carried at equity and an 
increase in deferred tax expense, which was partially offset by decreases in 
net income and cash used for long-term assets and liabilities.  Working 
capital remained relatively consistent in total; however, increases in other 
current assets and decreases in payables and accruals were partially offset by 
decreases in notes and accounts receivable and inventories.

Cash flow for investing for the first nine months of 1998 was $594 million, a 
slight increase from $593 million in the comparable period of 1997, 
principally attributable to lower investment, advances and acquisitions and 
higher sales of fixed and other assets partially offset by an increase in 
capital expenditures.  Major capital projects funded in the first nine months 
of 1998 included continuing work on an olefins expansion, a new butanol unit, 
a new CARBOWAX polyethylene glycol and TERGITOL surfactants facility and an 
ethanolamines unit, all at Taft, La.; a new olefins facility being built 
jointly with NOVA Chemicals Ltd., and a polyolefins project, both in Canada; 
as well as the upgrade of information technology infrastructure.  Major 
capital projects in 1997 included a new CARBOWAX polyethylene glycol and 
TERGITOL surfactants facility, an ethanolamines unit and an olefins expansion, 
all at Taft, La., as well as an upgrade of information technology 
infrastructure.

At September 30, 1998, the corporation has approximately $170 million in 
commitments related to authorized construction projects and certain 
investments.  These commitments are anticipated to be sourced through 
operating cash flows and borrowings.

Cash flow used for financing in the first nine months of 1998 was 
$123 million, an increase of $16 million from $107 million in the first nine 
months of 1997.  The first nine months of 1998 included net proceeds of $248 
million from the issuance of 6.25 percent public debentures due in June 2003.  
The first nine months of 1997 included $246 million net proceeds from the 
issuance of preferred stock of a subsidiary.  Common stock repurchases under 
the existing common stock repurchase program totaled 5.6 million shares for 
cash of $255 million for the first nine months of 1998.  In addition, in 1998 
stock was reacquired from employees to satisfy tax withholding requirements on 
restricted shares issued under employee benefit plans.  The corporation 
intends to acquire additional shares from time to time at prevailing market 
rates consistent with the combination of corporate cash flow and market 
conditions.  Cash dividends for the first nine months of 1998 totaled 
$92 million, while net repayments of debt, excluding the June 1998 issuance of 
public debentures, totaled $64 million.  

On October 26, 1998, the corporation issued $110 million of floating rate 
public notes, due in April 2000, under the corporation's $500 million shelf 
registration statement covering debt securities.  These notes bear interest at 
a rate which will be reset quarterly at the three-month London interbank 
offered rate, plus 0.65 percent.  Interest on the notes will be paid quarterly 
beginning in January.  The proceeds of this offering were used for general 
corporate purposes and to repay certain short-term debt.

<PAGE>

In April 1998, the corporation and Petroliam Nasional Berhad, the national oil 
company of Malaysia, agreed to form three joint venture companies that will 
build and operate a 600,000 metric-tons-per-year ethylene plant, a 385,000 
metric-tons-per-year ethylene oxide plant, and a multiple Specialties & 
Intermediates derivatives plant in Kerteh, Terengganu, Malaysia.  The joint 
ventures' primary marketing focus will be in Southeast Asia.  The corporation 
anticipates funding its approximate $500 million share of the cost of the 
complex through its 2001 planned startup date with internally generated funds 
and external debt.

The corporation's ratio of debt to total capital increased to 46.3 percent at 
September 30, 1998 from 44.2 percent at December 31, 1997.  At September 30, 
1998 there were no outstanding borrowings under the existing major bank credit 
agreement aggregating $1 billion.  The corporation has an effective shelf 
registration statement covering $390 million of public debt securities at 
October 31, 1998.

<PAGE>



                         PART II. OTHER INFORMATION


Item 1.  Legal Proceedings

         See Note 9 to the corporation's consolidated financial statements
         on pages 9 through 11 of this report on Form 10-Q.


Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

              The following exhibits are filed as part of this report:

                  27 - Financial Data Schedule.

         (b)  No reports on Form 8-K were filed for the three months ended
              September 30, 1998.






<PAGE>


                                 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.


                                                 UNION CARBIDE CORPORATION
                                                       (Registrant)




Date:  November 13, 1998                     By: /s/ John K. Wulff
                                                 JOHN K. WULFF
                                                 Vice-President, Chief
                                                 Financial Officer and
                                                 Controller
<PAGE>





                                EXHIBIT INDEX



Exhibit                                                             Page
  No.                             Exhibit                            No. 

  27        Financial Data Schedule                                  26




<PAGE>