SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                
                            FORM 10-Q
                                
                                
     (Mark One)

        [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR
              15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


              For the quarterly period ending June 28, 1997

                               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 1-3834
                                
                 CONTINENTAL MATERIALS CORPORATION
     (Exact name of registrant as specified in its charter)

          Delaware                          36-2274391
(State or other jurisdiction             (I.R.S. Employer
             of                         Identification No.)
incorporation or organization        


         225 West Wacker Drive, Chicago, Illinois  60606
             (Address of principal executive office)
                           (Zip Code)
                                
                                
                          (312) 541-7200
       (Registrant's telephone number, including area code)


             (Former name, former address and former
               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
                                
Number of common shares outstanding at July 30, 1997     1,104,211

                                
                                
<PAGE>
                                
                                
                 PART I - FINANCIAL INFORMATION
                                
Item 1.   Financial Statements

<TABLE>
                CONTINENTAL MATERIALS CORPORATION
              CONDENSED CONSOLIDATED BALANCE SHEETS
               JUNE 28, 1997 and DECEMBER 28, 1996
                           (Unaudited)
                (000's omitted except share data)

<CAPTION>
                                        JUNE 28,    DECEMBER 28,
          ASSETS                          1997          1996
<S>                                     <C>         <C>
Current assets:                                     
 Cash and cash equivalents              $    686    $    379
 Receivables, net                         20,862      14,584
 Inventories:                                       
  Finished goods                           9,374       8,696
  Work in process                          1,905       1,800
  Raw materials and supplies               5,833       4,688
 Prepaid expenses                          2,603       2,687
   Total current assets                   41,263      32,834
                                                    
Property, plant and equipment, net        18,456      18,818
Other assets:                                       
 Investment in mining partnership            600         600
 Other                                     1,534       1,641

                                        $ 61,853    $ 53,893
                                                           
          LIABILITIES                                      
Current liabilities:                                        
 Bank loan payable                      $  6,500    $    400
 Current portion of long-term debt         1,900       1,500
 Accounts payable and accrued expenses    13,343      13,863
 Income taxes                                602         450
   Total current liabilities              22,345      16,213
                                                    
Long-term debt                             7,350       6,500
Deferred income taxes                      1,830       1,830
                                                           
          SHAREHOLDERS' EQUITY                             
Common shares, $0.50 par value;                            
 authorized 3,000,000; issued 1,326,588      663         663
Capital in excess of par value             3,484       3,484
Retained earnings                         29,151      28,173
Treasury shares, 223,377, at cost        (2,970)      (2,970)
                                          30,328      29,350
                                                    
                                        $ 61,853    $ 53,893
</TABLE>
                                
                                
                                
                                
                     See accompanying notes
                                2
<PAGE>                                
                                
<TABLE>                                
                CONTINENTAL MATERIALS CORPORATION
   CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
   FOR THE THREE MONTHS ENDED JUNE 28, 1997 AND JUNE 29, 1996
                           (Unaudited)
            (000's omitted except per share amounts)


<CAPTION>
                                            JUNE 28,    JUNE 29,
                                              1997        1996
                                                        
<S>                                         <C>          <C>   
Net sales                                   $ 27,991     $ 27,124
                                                                
Costs and expenses:                                             
 Cost of sales (exclusive of depreciation,                      
  depletion and amortization)                 21,623       20,426
 Depreciation, depletion and amortization        876          668
 Selling and administrative                    3,667        3,614
                                              26,166       24,708
                                                        
Operating income                               1,825        2,416
                                                        
Interest                                        (309)        (181)
Equity loss from mining partnership              (29)        (138)
Other income, net                                 85          108
                                                        
Income before income taxes                     1,572        2,205
                                                        
Provision for income taxes                       552          837
                                                        
 Net income                                    1,020        1,368
                                                        
Retained earnings, beginning of period        28,131       25,241
                                                        
Retained earnings, end of period            $ 29,151     $ 26,609
                                                        
Net income per share                        $    .92     $   1.24
                                                        
Average shares outstanding                     1,104        1,104

</TABLE>








                     See accompanying notes
                                3
                                
<PAGE>                                
                                
<TABLE>                                
                CONTINENTAL MATERIALS CORPORATION
   CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
    FOR THE SIX MONTHS ENDED JUNE 28, 1997 AND JUNE 29, 1996
                           (Unaudited)
            (000's omitted except per share amounts)
                                
                                
<CAPTION>
                                            JUNE 28,    JUNE 29,
                                              1997        1996

<S>                                         <C>         <C>             
Net sales                                   $ 48,896    $ 44,976
                                                               
Costs and expenses:                                            
 Cost of sales (exclusive of depreciation,                     
  depletion and amortization)                 38,073      34,329
 Depreciation, depletion and amortization      1,755       1,329
 Selling and administrative                    7,288       6,782
                                              47,116      42,440
                                                        
Operating income                               1,780       2,536
                                                        
Interest                                        (504)       (329)
Equity loss from mining partnership              (57)     (1,145)
Other income, net                                285         213
                                                        
Income before income taxes                     1,504       1,275
                                                        
Provision for income taxes                       526         484
                                                        
Net income                                       978         791
                                                        
Retained earnings, beginning of period        28,173      25,818
                                                        
Retained earnings, end of period            $ 29,151    $ 26,609
                                                        
Net income per share                        $    .89    $    .71
                                                        
Average shares outstanding                     1,104       1,107
                                
                                
</TABLE>                                
                                
                                
                                
                                
                                
                                
                                
                                
                     See accompanying notes
                                4
<PAGE>                                

<TABLE>
                CONTINENTAL MATERIALS CORPORATION
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    FOR THE SIX MONTHS ENDED JUNE 28, 1997 AND JUNE 29, 1996
                           (Unaudited)
                         (000's omitted)
                                
<CAPTION>                              
                                             JUNE 28,    JUNE 29,
                                               1997        1996
                                                         
<S>                                          <C>         <C>    
Net cash used by operating activities        $(5,648)    $  (713)
                                                               
Investing activities:                                          
 Capital expenditures                         (1,347)     (1,228)
 Proceeds from sale of property                                
  and equipment                                    9          56
 Investment in mining partnership                (57)       (395)
Net cash used in investing activities         (1,395)     (1,567)
                                                               
Financing activities:                                          
 Borrowings under revolving credit facility    6,100       2,900
 Long-term borrowings                          2,000          --
 Repayment of long-term debt                    (750)       (510)
 Payment to acquire treasury stock                --        (286)
Net cash provided by financing activities      7,350       2,104
                                                         
Net increase (decrease) in cash and                      
 cash equivalents                                307        (176)
Cash and cash equivalents:                               
 Beginning of year                               379       1,074
                                                         
 End of period                               $   686    $    898
                                                         
                                                         
                                                         
Supplemental disclosures of cash flow items:             
Cash paid during the six months for:                     
 Interest                                    $   555    $    348
 Income taxes                                    380           1

</TABLE>








                     See accompanying notes
                                5

<PAGE>

                CONTINENTAL MATERIALS CORPORATION
          SECURITIES AND EXCHANGE COMMISSION FORM 10-Q
    NOTES TO THE QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS
                   QUARTER ENDED JUNE 28, 1997
                           (Unaudited)
                              
                                
                                
                                
1.The unaudited interim consolidated financial statements
  included herein are prepared pursuant to the rules and
  regulations for reporting on Form 10-Q.  Accordingly, certain
  information and footnote disclosures normally accompanying the
  annual financial statements have been omitted.  The interim
  financial statements and notes should be read in conjunction
  with the consolidated financial statements and notes thereto
  included in the Company's latest annual report on Form 10-K.
  In the opinion of management, the consolidated financial
  statements include all adjustments (none of which were other
  than normal recurring adjustments) necessary for a fair
  statement of the results for the interim periods.

2.During the quarter, as allowed by the current credit
  agreement, the Company elected to convert $2,000,000
  qualifying capital expenditures purchased with funds from the
  revolving credit facility to the term loan with a
  corresponding decrease in the revolving credit facility and a
  proportional increase in the term-loan amortization.

3.The provision for income taxes is based upon the estimated
  effective tax rate for the year.

4.Operating results for the first six months of 1997 are not
  necessarily indicative of performance for the entire year.
  Historically, sales of construction materials are higher in
  the second and third quarters.  Overall, sales of heating and
  air-conditioning products have not shown strong seasonal
  fluctuations in recent years although product mix has
  historically yielded higher gross profit margins in the fourth
  quarter.  (See Note 12 of Notes to Consolidated Financial
  Statements in the Company's 1996 Annual Report.)


















                                6
                                
<PAGE>                                
                                
   Item 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operation
                                
                                
  Financial Condition (See pages 2 and 5)

  Operations for the first six months of 1997 used $5,648,000 in
  cash compared to $713,000 in 1996.  The increased use of cash
  is attributed to higher inventory balances and reduced accrued
  expense and payables balances.  The increase in inventories is
  the result of a decision by Williams Furnace to carry
  additional wall furnaces at this time as well an increase in
  Williams' fan coil business.  The Company expects to reduce
  inventories throughout the second half of the year in line
  with current sales demand.  The decrease in accrued expenses
  reflects the expected payment of certain 1996 year end
  accruals while the decrease in accounts payable is the result
  of timing of payments.
  
  The Company estimates that its short-term line of credit (of
  which $6,500,000 was outstanding at June 28, 1997) will be
  adequate to meet its cash requirements for the foreseeable
  future.  See also the discussion of the credit facility in
  Note 2 of the accompanying Notes to the Quarterly Consolidated
  Financial Statements.  Historically, the Company's borrowings
  against the short-term line peak during the second quarter and
  decline over the remainder of the year.
  
  
  Operations - Comparison of Quarter Ended June 28, 1997 to
  Quarter Ended June 29, 1996
  (See page 3)
  
  Consolidated net sales increased $867,000 (3.2%).  The
  construction materials segment reported sales up $1,705,000
  (14.3%) due to the acquisition of Transit Mix of Pueblo during
  the last quarter of 1996 which offset the expected modest
  decline in the construction market in the Colorado Springs,
  Colorado area.  Unfavorable weather conditions during the
  height of Phoenix Manufacturing's selling season were mainly
  responsible for the decline of $837,000 (5.5%) in the heating
  and air-conditioning segment.  Williams Furnace showed
  improved sales volume attributable to the fan coil product
  line, however, this growth was not significant enough to
  offset the decline in this segment's other product offerings.
  
  Consolidated cost of sales (exclusive of depreciation,
  depletion and amortization) as a percentage of sales increased
  from 75.3% to 77.2% as a result of increased volume in the
  traditionally lower margin construction materials segment and
  a change in product mix in the heating and air-conditioning
  segment.
  
  Depreciation, depletion and amortization increased $208,000
  (31.1%) mainly due to the acquisition of Transit Mix of Pueblo
  in the last quarter of 1996.
  
  
  
  
  
  
  
                                7
<PAGE>  
  
  Operations - Comparison of Six Months Ended June 28, 1997 to
  Six Months June 29, 1996(See page 4)
  
  Net sales rose $3,920,000 (8.7%).  The increase in the
  construction materials segment, $4,255,000 (21.7%) and the
  decrease in the heating and air-conditioning segment $334,000
  (1.3%), were due to the reasons noted above.
  
  Consolidated cost of sales (exclusive of depreciation,
  depletion and amortization) as a percentage of sales increased
  from 76.3% to 77.9% due to reasons noted above.
  
  Depreciation, depletion and amortization increased $426,000
  (32.1%) due to the reason noted above.
  
  The prior year equity loss from mining partnership includes a
  first quarter write-down in the carrying value of the
  investment of $628,000.
  
  Historically, the Company has experienced operating losses
  during the first quarter.  The second quarter has historically
  improved over the first quarter's operating results.  This
  trend is expected to continue as sales of construction
  materials are generally higher in the second and third
  quarters while sales of heating and air-conditioning products,
  although not showing strong seasonality, experience product
  mix changes that yield higher gross profits in the fourth
  quarter.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                8
<PAGE>

   PART II Other Information  -


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

        (a)  The annual meeting of the stockholders of the
             Company was held on May 28, 1997.
             
        (b)  At that meeting, three individuals, two of whom are
             current directors, were nominated and elected to
             serve until the 2000 Annual Meeting by the following
             votes:


              Director         Shares       Shares        Shares
                                 For        Against      Withheld
          Thomas H. Carmody    992,452        --          6,377 
          Ronald J. Gidwitz    984,222        --          14,607
          Darrell M. Trent     992,452        --          6,377

             There were no broker non votes.

             The following directors' terms of office continued
             after the meeting until the Annual Meetings of the
             years as noted:

                   Directors           Expiration
                                         of Term
            Betsy R. Gidwitz              1998
            James G. Gidwitz              1998
            Joseph J. Sum                 1998
            Ralph W. Gidwitz              1999
            William G. Shoemaker          1999
            Theodore R. Tetzlaff          1999

        (c)  In addition to the above election, the independent
             auditing firm of Coopers & Lybrand L.L.P. was
             appointed by the following vote:


               For          Against        Abstain
             992,030         2,742          4,057


             There were no broker non votes.
             

        (d)  No other matters were submitted for vote.


   Item 6.  Exhibits and Reports on Form 8-K

        (a)  Exhibits:                                   
                                                         
             Exhibit 11:  Computation of per share earnings
                                                         
             Exhibit 27:  Financial data schedule

        (b)  Registrant filed no reports on Form 8-K during the
             quarter ended June 28, 1997.



                                9
                                
<PAGE>

                            SIGNATURE
                                
                                
                                
                                
                                
Pursuant  to  the requirement 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.

                      CONTINENTAL MATERIALS CORPORATION




Date:   July 31, 1997      By:  /S/ Joseph J. Sum
                                Joseph J. Sum, Vice President
                                and Chief Financial Officer

































                               10