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 September 27, 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 October 24, 1997  1,103,211

                                
<PAGE>
                                

                                
                                
                 PART I - FINANCIAL INFORMATION
                                
Item 1.   Financial Statements

                CONTINENTAL MATERIALS CORPORATION
              CONDENSED CONSOLIDATED BALANCE SHEETS
            SEPTEMBER 27, 1997 and DECEMBER 28, 1996
                           (Unaudited)
                (000's omitted except share data)
                                
<TABLE>
<CAPTION>
                                       SEPTEMBER 27,     DECEMBER 28,
          ASSETS                           1997              1996
<S>                                    <C>               <C>   
Current assets:                                           
 Cash and cash equivalents             $    842          $    379
 Receivables, net                        17,427            14,584
 Inventories:                                               
  Finished goods                          8,101             8,696
  Work in process                         1,755             1,800
  Raw materials and supplies              5,296             4,688
 Prepaid expenses                         2,713             2,687
   Total current assets                  36,134            32,834
                                                            
Property, plant and equipment, net       18,412            18,818
Other assets:                                             
 Investment in mining partnership           600               600
 Other                                    1,875             1,641
                                       $ 57,021          $ 53,893
                                                          
          LIABILITIES                                     
Current liabilities:                                      
 Bank loan payable                     $  1,000          $    400
 Current portion of long-term debt        1,900             1,500
 Accounts payable and accrued expenses   12,749            13,863
 Income taxes                               711               450
   Total current liabilities             16,360            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                        30,304            28,173
Treasury shares, 223,377, at cost        (2,970)           (2,970)
                                         31,481            29,350
                                                          
                                       $ 57,021          $ 53,893
                                
</TABLE>
                                
                                
                                
                     See accompanying notes
                                2
<PAGE>
                                
                                
                                
                  CONTINENTAL MATERIALS CORPORATION
    CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28,1996
                           (Unaudited)
            (000's omitted except per share amounts)


<TABLE>
<CAPTION>
                                            SEPTEMBER 27,     SEPTEMBER 28,
                                               1997              1996
                                                                             
<S>                                         <C>               <C>           
Net sales                                   $ 25,612          $ 21,718
                                                              
Costs and expenses:                                           
 Cost of sales (exclusive of depreciation,                    
  depletion and amortization)                 19,677            16,058
 Depreciation, depletion and amortization        881               666
 Selling and administrative                    3,214             3,142
                                              23,772            19,866
                                                                     
Operating income                               1,840             1,852
                                                                 
Interest                                        (244)             (112)
Equity loss from mining partnership              (30)             (350)
Other income                                     209               124
                                                              
Income before income taxes                     1,775             1,514
                                                                 
Provision for income taxes                       622               464
                                                              
Net income                                     1,153             1,050
                                                              
Retained earnings, beginning of period        29,151            26,609
Retained earnings, end of period            $ 30,304          $ 27,659
                                                              
Net income per share                        $   1.05          $    .95
                                                              
Average shares outstanding                     1,103             1,103

</TABLE>










                     See accompanying notes
                                3
                                
<PAGE>
                                
                                
                                
                  CONTINENTAL MATERIALS CORPORATION
    CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996
                           (Unaudited)
              (000's omitted except per share amounts)



<TABLE>
<CAPTION>
                                             SEPTEMBER 27,   SEPTEMBER 28,
                                                 1997            1996
                                                                         
<S>                                          <C>             <C>     
Net sales                                    $ 74,508        $ 66,694
                                                            
Costs and expenses:                                         
 Cost of sales (exclusive of depreciation,                  
  depletion and amortization)                  57,749          50,387
 Depreciation, depletion and amortization       2,636           1,995
 Selling and administrative                    10,503           9,924
                                               70,888          62,306
                                                            
Operating income                                3,620           4,388
                                                            
Interest                                         (748)           (441)
Equity loss from mining partnership               (87)         (1,495)
Other income                                      494             337
                                                                    
Income before income taxes                      3,279           2,789
                                                            
Provision for income taxes                      1,148             948
                                                            
Net income                                      2,131           1,841
                                                            
Retained earnings, beginning of period         28,173          25,818
Retained earnings, end of period             $ 30,304        $ 27,659
                                                            
Net income per share                         $   1.93        $   1.66
                                                            
Average shares outstanding                      1,103           1,106




</TABLE>






                     See accompanying notes
                                4
                                
<PAGE>
                                
                                
                CONTINENTAL MATERIALS CORPORATION
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996
                           (Unaudited)
                         (000's omitted)
                                
                                
<TABLE>
<CAPTION>
                                
                                
                                               SEPTEMBER 27,    SEPTEMBER 28,
                                                  1997             1996     
<S>                                            <C>              <C>
Net cash provided by operating activities      $    848         $  3,878
                                                                
Investing activities:                                           
 Capital expenditures                            (2,157)          (2,073)
 Proceeds from sale of property and equipment         9               63
 Investment in mining partnership                   (87)            (745)
Net cash used in investing activities            (2,235)          (2,755)
                                                                
Financing activities:                                           
 Borrowings (repayments) under revolving                                 
  credit facility                                   600           (1,400)
 Long-term borrowings                             2,000               --
 Repayment of long-term debt                       (750)            (511)
 Payment to acquire treasury stock                   --             (286)
Net cash provided (used) by financing activities  1,850           (2,197)
                                                                
Net increase (decrease) in cash and                                   
 cash equivalents                                   463           (1,074)
Cash and cash equivalents:                                           
 Beginning of year                                  379            1,074
                                                                
 End of period                                 $    842         $     --
                                                                
                                                                
                                                                
Supplemental disclosures of cash flow items:                    
Cash paid during the nine months for:                           
 Interest                                      $    834         $    500
 Income taxes                                       893              490


</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 SEPTEMBER 27, 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 second quarter, as allowed by the current credit
  agreement, the Company elected to convert $2,000,000 of
  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 nine 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 nine months of 1997 provided $848,000
  in cash compared to $3,878,000 in 1996.  The decrease in cash
  provided is attributed to higher receivable balances and
  reduced accrued expense and payables balances.  The increase
  in receivables is the result of higher sales volume in the
  construction materials segment as well as an earlier preseason
  program initiated by Phoenix Manufacturing.  The decrease in
  accrued expenses is the result of timing of payments.
  
  The Company estimates that its short-term line of credit (of
  which $1,000,000 was outstanding at September 27, 1997) will
  be adequate to meet its cash requirements for the foreseeable
  future.  See also the discussion of the line of credit 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 September 27, 1997 to
  Quarter Ended September 28, 1996 (See page 3)
  
  Consolidated net sales increased $3,894,000 (17.9%) as the
  construction materials segment showed strong growth. Sales of
  this segment were up $3,893,000 (34.9%) due to the acquisition
  of Transit Mix of Pueblo during the last quarter of 1996 and
  continued strength in construction activity in the Colorado
  Springs, Colorado area.  The heating and air-conditioning
  segment sales activity was in line with the prior year.
  
  Consolidated cost of sales (exclusive of depreciation and
  depletion) as a percentage of sales increased from 73.9% to
  76.8% attributed mainly to product mix in the heating and air-
  conditioning segment.
  
  Depreciation, depletion and amortization increased $215,000
  (32.2%) mainly due to the acquisition of Transit Mix of Pueblo
  in the last quarter of 1996.
  
  Selling and administrative expenses increased slightly while
  declining as a percentage of sales from 14.5% to 12.5%.  The
  dollar increase is due to higher sales levels while the
  decline in percentage is due to the fixed nature of many of
  the costs.
  
  Equity loss from mining partnership was reduced by $320,000.
  Production at the mine was halted in February 1996 and only
  carrying costs remain.  The partners continue their efforts to
  sell the project.
  
  During 1996, the Financial Accounting Standards Board (FASB)
  issued a new pronouncement, Statement of Financial Accounting
  Standards (SFAS) No. 128, "Earnings per share," which is
  relevant to the Company's operations.  The statement is
  effective for financial statements for both interim and annual
  periods ending after December 15, 1997.  Earlier application
  is not permitted.  The Company intends to adopt SFAS No. 128
  at year end 1997.  Its effect is not expected to be material
  to earnings per share.
  
  The FASB also issued pronouncements, SFAS No. 130, "Reporting
  comprehensive income," and SFAS No. 131, "Disclosures about
  segments of an enterprise and related information" which are
  relevant to the Company's operations.  These statements are
  effective for fiscal years beginning after December 15, 1997.
  The Company has not yet fully evaluated these pronouncements
  but does not believe their effect will be material.
  
  
                                7

<PAGE>  
  
  Operations - Comparison of Nine Months Ended September 27,
  1997 to Nine Months Ended September 28, 1996 (See page 4)
  
  Net sales increased $7,814,000 (11.7%) as sales in the
  construction materials segment rose $8,148,000 (26.5%) due to
  the reasons noted above.  Unfavorable weather conditions
  during the height of Phoenix Manufacturing's selling season
  were mainly responsible for the decline in the heating and air-
  conditioning segment.
  
  Consolidated cost of sales (exclusive of depreciation and
  depletion) as a percentage of sales increased from 75.5% to
  77.5% attributable to the events described above.
  
  Depreciation, depletion and amortization increased $641,000
  (32.1%) due to the reason noted above.
  
  Selling and administrative expenses increased $579,000 (5.8%)
  while the percentage of sales declined from 14.9% to 14.1%.
  The dollar increase is attributable to the higher sales volume
  while the percentage decline is due to the fixed nature of
  many of the expenses.
  
  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 subsequent quarters have
  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 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 September 27, 1997




                            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:    October 24, 1997      By:  /S/ Joseph J. Sum
                                    Joseph J. Sum, Vice President
                                    and Chief Financial Officer



















                                9