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

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

                                    FORM 10Q



(X)  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

     For the period ended             September 30, 1995               

( )  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:                   1-8676                  


                              FANSTEEL INC.                            
             (Exact name of registrant as specified in its charter)


                 Delaware                                36-1058780    
      (State or other jurisdiction of                   (IRS Employer
       incorporation or organization)               Identification No.)


      Number One Tantalum Place, North Chicago, IL          60064      
        (Address of principal executive offices)          (Zip Code)

                               (708) 689-4900                          
              (Registrant's telephone number, including area code)


                                Not applicable                         
              (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.

                                             (X) Yes        ( ) No

                                 8,598,858                             
          (Number of shares of $2.50 par value common stock outstanding
                             as of October 31, 1995)


                       PART 1 - FINANCIAL INFORMATION               Form 10-Q
                       ITEM 1 - FINANCIAL STATEMENTS                Page 2
                                  FANSTEEL INC.
                           CONSOLIDATED BALANCE SHEET  
                                                     September 30,  December 31,
                                                         1995           1994    
    ASSETS                                            (Unaudited)        *

    Current Assets                                   
     Cash and cash equivalents (including securities
      purchased under agreement to resell of
      $6,256,000 in 1995 and $8,815,000 in 1994)     $ 7,717,023   $ 9,429,031
     Marketable securities                               982,040       293,367
     Accounts receivable - net                        14,321,797    13,048,394
     Inventories
      Raw material                                     3,066,593     3,135,098
      Work-in-process                                 11,327,935    11,376,665
      Finished goods                                   5,394,442     5,256,355
                                                      19,788,970    19,768,118
      Less reserve to state certain 
       inventories at LIFO cost                        6,987,569     6,987,569
                                                      12,801,401    12,780,549
     Other assets - current
      Deferred income taxes                            1,477,994     1,981,749
      Other                                            1,005,051       949,479
          Total current assets                        38,305,306    38,482,569
    Net Assets of Discontinued Operations                522,637       522,637
    Property, Plant and Equipment
     Land                                              1,337,641       872,641
     Buildings                                         9,296,060     8,721,261
     Machinery and equipment                          44,881,692    43,305,113
                                                      55,515,393    52,899,015
     Less accumulated depreciation                    45,025,329    43,535,103
                                                      10,490,064     9,363,912
    Other Assets
     Marketable securities                            14,604,402    15,001,512
     Prepaid pension asset                             7,852,026     7,942,741
     Deferred income taxes                               176,094       175,476
     Property held for sale                            1,361,008     1,361,008
     Other                                                31,063        31,063
                                                      24,024,593    24,511,800

    Total Assets                                     $73,342,600   $72,880,918




                 * - Derived from audited financial statements 

                (See Notes to Consolidated Financial Statements)


                       PART 1 - FINANCIAL INFORMATION               Form 10-Q
                       ITEM 1 - FINANCIAL STATEMENTS                Page 3
                                  FANSTEEL INC.
                       CONSOLIDATED BALANCE SHEET   (Contd.)


                                                     September 30,  December 31,
                                                         1995           1994    
                                                      (Unaudited)        *

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities
     Accounts payable                                $ 9,585,339   $ 7,607,591
     Accrued liabilities                               7,447,979     9,716,919
     Accrued income taxes                                603,517        57,481
     Current maturities of long-term debt                 57,728             -
          Total current liabilities                   17,694,563    17,381,991
    Long-term Debt                                       226,194             -
    Other Liabilities
     Discontinued operations                           4,000,000     4,255,000
     Deferred income taxes                             1,083,062       965,079
     Obligations under capital leases                     24,845       107,057

          Total other liabilities                      5,107,907     5,327,136
    Shareholders' Equity
     Preferred stock without par value
      Authorized and unissued 1,000,000 shares                 -             -
     Common stock, par value $2.50
      Authorized 12,000,000 shares
      Issued and outstanding 8,598,858 shares         21,497,145    21,497,145
     Unrealized gain (loss) on marketable securities       8,353       (81,525)
     Retained earnings                                28,808,438    28,756,171
          Total shareholders' equity                  50,313,936    50,171,791

    Total Liabilities and Shareholders' Equity       $73,342,600   $72,880,918


                 * - Derived from audited financial statements 

                (See Notes to Consolidated Financial Statements)

                               FANSTEEL INC.                   Form 10-Q
                     CONSOLIDATED STATEMENT OF INCOME          Page 4
                                   (UNAUDITED)


                                                  For the Three Months Ended 
                                                  September 30,  September 30,
                                                      1995           1994    

     Net sales                                    $ 25,631,292   $ 22,318,626

     Costs and expenses
      Cost of products sold                         21,303,269     18,198,078
      Selling, general and administrative            3,216,393      3,033,226

                                                    24,519,662     21,231,304


     Operating income                                1,111,630      1,087,322

     Other income (expense)
      Interest income on investments                   305,558        272,087
      Interest other - net                              (3,476)        (1,934)
      Other                                            (47,035)       279,856

                                                       255,047        550,009


     Income before income taxes                      1,366,677      1,637,331


     Income tax provision                              531,000        625,000


     Net income                                   $    835,677   $  1,012,331


     Weighted average number of common
      shares outstanding                             8,598,858      8,598,858


     Net income per share
      (on average shares outstanding)                    $0.10          $0.12



     Dividends per common share                          $0.10          $0.10





                (See Notes to Consolidated Financial Statements)


                               FANSTEEL INC.                   Form 10-Q
                     CONSOLIDATED STATEMENT OF INCOME          Page 5
                                   (UNAUDITED)


                                                   For the Nine Months Ended 
                                                  September 30,  September 30,
                                                      1995           1994    

     Net sales                                    $ 77,012,461   $ 66,185,009

     Costs and expenses
      Cost of products sold                         63,503,656     53,363,443
      Selling, general and administrative            9,974,705      9,348,813

                                                    73,478,361     62,712,256


     Operating income                                3,534,100      3,472,753

     Other income (expense)
      Interest income on investments                   920,376        751,909
      Interest other - net                              (6,247)        (6,002)
      Other                                           (102,304)       239,380

                                                       811,825        985,287


     Income before income taxes                      4,345,925      4,458,040


     Income tax provision                            1,714,000      1,748,000


     Net income                                   $  2,631,925   $  2,710,040


     Weighted average number of common
      shares outstanding                             8,598,858      8,598,858


     Net income per share
      (on average shares outstanding)                    $0.31          $0.32



     Dividends per common share                          $0.30          $0.30






                (See Notes to Consolidated Financial Statements)


                              FANSTEEL INC.                      Form 10-Q
                 CONSOLIDATED STATEMENT OF CASH FLOWS            Page 6 
                                  (UNAUDITED)  

FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                                                           1995         1994    

                                                        Increase (decrease) in 
                                                       cash and cash equivalents
    Cash flows from operating activities:              
      Net income                                       $ 2,631,925  $ 2,710,040

      Adjustments to reconcile net income to net
      cash provided by (used in) operating activities:
        Depreciation                                     1,490,281    1,525,288
        Net pension charge (credit)                         90,715      (92,869)
        (Gain) from disposal of property, plant and    
          equipment                                           (250)    (251,405)
        Deferred income tax charge                         572,355            -

        Changes in assets and liabilities:

         (Increase) in marketable securities              (152,920)    (234,744)
         (Increase) in accounts receivable              (1,273,403)    (102,198)
         Decrease in income tax refunds receivable           2,288            -
         (Increase) in inventories                         (20,852)    (603,608)
         (Increase) decrease in other assets - current     (55,572)     152,800
         (Decrease) in accounts payable and accruals      (551,091)    (341,174)
         Increase in income taxes payable                  543,748      524,634
         Decrease in other assets                                -        2,579

      Net cash provided by operating activities          3,277,224    3,289,343

    Cash flows from investing activities:
      Additions to property, plant and equipment        (2,616,433)  (1,400,711)
      Proceeds from sale of property, plant
        and equipment                                          250      260,863
      Proceeds from disposition of marketable
        securities                                         500,000   10,250,000
      Investment in marketable securities                 (500,000) (13,251,816)

      Net cash (used in) investing activities           (2,616,183)  (4,141,664)

    Cash flows from financing activities:
      Proceeds from long-term debt                         295,310            -
      Payments of long-term debt                           (11,388)    (300,000)
      Proceeds from capital leases                               -      113,924
      Principal payments for capital leases                (77,313)     (65,599)
      Dividends paid                                    (2,579,658)  (2,579,657)

      Net cash (used in) financing activities           (2,373,049)  (2,831,332)

    Net (decrease) in cash and cash equivalents         (1,712,008)  (3,683,653)


    Cash and cash equivalents at beginning of period     9,429,031   10,644,413

    Cash and cash equivalents at September 30          $ 7,717,023  $ 6,960,760

                (See Notes to Consolidated Financial Statements)

                                FANSTEEL INC.                    Form 10-Q
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        Page 7
                                   (UNAUDITED)


Consolidated Financial Statements


  The consolidated balance sheet at September 30, 1995, the consolidated

statements of income for the three months and nine months ended September 30,
1995 and 1994, and the consolidated statements of cash flows for the nine months
ended September 30, 1995 and 1994, are unaudited, but include all adjustments
(consisting only of normal and recurring accruals) which the Company considers
necessary for fair presentation.

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes. 
Actual results could differ from those estimates.

  The accompanying consolidated financial statements do not include all
disclosures normally provided in annual financial statements and, therefore,
should be read in conjunction with the year-end financial statements.

  Effective, January 1, 1994, the Company adopted Financial Accounting Standards
Board (FASB) Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."  The Company has determined its securities to be "held-to-
maturity" or "available-for-sale" securities, depending upon the applicable
security.  Marketable securities with a maturity date of one year or less at
time of purchase are classified as current, and over one year maturity date at
time of purchase are classified as non-current on the balance sheet.

  Securities classified as available-for-sale at September 30, 1995 include U.S.
government securities and municipal bonds with maturity dates from October 1,
1995 to September 30, 1998.  Net unrealized holding gains included in
shareholders' equity at September 30, 1995 are $8,000, consisting of gross
unrealized gains of $14,000 net of deferred income taxes.  The aggregate fair
value of these securities at September 30, 1995 is $4,625,000.  Amortized cost
of U.S. government securities and municipal bonds available-for-sale at
September 30, 1995 is $1,347,000 and $3,265,000, respectively.

  Securities classified as held-to-maturity at September 30, 1995 represent U.S.
Treasury Notes with maturity dates of January 31, 1997 and April 14, 1998. 
Amortized cost and fair value of these securities at September 30, 1995 are
$9,979,000 and $9,934,000, respectively.  There was a gross unrealized loss on
these securities of $45,000 at September 30, 1995.



                                FANSTEEL INC.                    Form 10-Q
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)     Page 8
                                   (UNAUDITED)

Business Segment Information

  The Company is engaged in the manufacture of specialty metal products, which
it classifies into two business segments:  Industrial Tools and Metal
Fabrications.  Net sales and operating income for the third quarter and nine
months ended September 30, 1995 and 1994 for each of the Company's business
segments are summarized below:

                                Third Quarter               Nine Months      
                              1995          1994         1995          1994   

    Net Sales:                                       

 Industrial Tools -

      Sales               $12,418,238   $11,042,464  $37,730,520   $32,450,840
      Intersegment sales            -             -          (35)            -
                           12,418,238    11,042,464   37,730,485    32,450,840

 Metal Fabrications -

      Sales                13,214,660    11,292,213   39,294,551    33,774,277

      Intersegment sales       (1,606)      (16,051)     (12,575)      (40,108)
                           13,213,054    11,276,162   39,281,976    33,734,169

                          $25,631,292   $22,318,626  $77,012,461   $66,185,009

    Operating Income:                                

     Industrial Tools     $   725,377   $   670,087  $ 2,368,077   $ 2,123,249

     Metal Fabrications       389,954       420,590    1,181,922     1,357,217

     Corporate                 (3,701)       (3,355)     (15,899)       (7,713)

                          $ 1,111,630   $ 1,087,322  $ 3,534,100   $ 3,472,753





                  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS        Form 10-Q
                 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS      Page 9   



Quarter Ended September 30, 1995 Compared to Quarter Ended September 30, 1994

  Net sales for the third quarter of 1995 were $25,631,000, an increase of
$3,312,000, or 14.8%, from third quarter, 1994 net sales of $22,319,000.

  Industrial Tools business segment net sales for the quarter ended September
30, 1995 were $12,418,000 compared to $11,043,000 for the same period of 1994,
an increase of $1,375,000 or 12.5%.  The primary reason for this sales increase
was in the tungsten carbide cutting tools product lines, primarily tungsten
carbide rod and inserts.  Rod sales, up 41.1%, were positively affected by
aggressive marketing and supply techniques which expanded the customer base. 
The increase in inserts sales was aided by the introduction and marketing of new
products.  Net sales of coal mining tools and construction tools product lines
declined.  Improvements made in quality and price have not been matched by the
necessary improvements in marketing and sales promotion. 

  Metal Fabrications business segment net sales for the third quarter of 1995
were $13,213,000 compared to $11,276,000 for the third quarter of 1994, an
increase of $1,937,000 or 17.2%.  Forgings product line net sales increased
50.6%.  This product line is heavily dependent on aircraft industry customers;
the increase in sales is the result of a concentrated effort to increase sales
in commercial aircraft and other commercial application markets.  Sales to
commercial aircraft and medical instrument customers have risen over the last
three quarters.  The other product line which is dependent on defense-related
industries is sand mold castings.  The sand mold castings product line net sales
in the current quarter exceeded the same quarter of last year by 26.1%.  Sales
of magnesium/thorium castings to defense customers were primarily responsible
for this increase.  Significant progress in attracting commercial orders has
occurred. However, production efficiencies in new processes targeted for these
commercial orders have not improved to the point where tangible increases in
sales have been realized.  Wire forming product line net sales remained
constant. Investment castings product line net sales, after showing increases
over prior year performance for the last several quarters, lagged behind the
third quarter of 1994 by 5.6%.  Demand from customers in the industrial sector
slowed in the third quarter, as some had summer vacation shut-downs which did
not occur in 1994.

  Cost of goods sold for the third quarter of 1995 was $21,303,000, an increase
of $3,105,000 from the same quarter of last year, principally due to increased
sales volume.  Cost of sales as a percent of net sales for the third quarter of
1995 was 83.1% compared to 81.5% for the same quarter of last year.  Raw
material price increases, not all of which could be passed on to customers, were

primarily responsible for the cost of sales change.

  Selling, general and administrative expenses for the quarter ended September
30, 1995 were $3,216,000, or 12.6% of net sales, compared to $3,033,000, or
13.6% of net sales, for the same period of 1994. Commission expense related to
higher sales levels account for the majority of the dollar increase in selling,
general and administrative expenses.  However, cost control programs, which
include an emphasis on efficiencies, have successfully contained expenses. 
Combined with improved sales volume, these controls and efficiencies helped to
reduce selling, general and administrative expenses as a percent of net sales.


                  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS        Form 10-Q
                 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS      Page 10  
                                    (Contd.)


  Other income for the third quarter of 1995 totalled $255,000 compared to
$550,000 for the like period of 1994.  Interest earned on marketable securities
was $306,000, a slight increase from 1994 results as interest rates on short
term investments in 1995 were higher.  Other income for 1994 included a $251,000
gain on the sale of assets related to a closed facility.

  Net income for the third quarter of 1995 was $836,000 or $.10 per share,
compared to $1,012,000 or $.12 per share for the same quarter of 1994, a
decrease of $176,000.  The net gain on the sale of assets related to a closed
facility in 1994 was $153,000 or $.02 per share.

Nine Months Ended September 30, 1995 Compared to the Nine Months Ended September
30, 1994

  Net sales for the nine months ended September 30, 1995 were $77,012,000, an
increase of $10,827,000, or 16.4%, from year-to-date 1994 net sales of
$66,185,000.

  Industrial Tools business segment net sales for the first nine months of 1995
were $37,730,000 compared to $32,451,000 for the same period of 1994, an
increase of $5,279,000 or 16.3%.  Tungsten carbide inserts net sales improved
13.5% as a result of a stronger general economy, the introduction of the
VR/Notch and diamond tipped inserts in late 1994/early 1995, and quality
improvements across the board.  A concentrated effort to expand the customer
base, using aggressive marketing and supply methods, provided improvement in
tungsten carbide rod net sales.  Sales in our coal mining tools product line
have declined.  Efforts to expand the customer base in this product line by
engaging sales agents in addition to direct salesmen have not resulted in the
desired effects on revenue generation.  A review of our marketing and sales
plans for this product line are ongoing.  Construction tools product line net
sales have also been on the decline in recent months despite price reductions
and quality improvements.  Further market analysis and a review of our sales
activities are ongoing.

  Metal Fabrications business segment net sales for the first nine months of
1995 were $39,282,000 compared to $33,734,000 for the same period of 1994, an
increase of $5,548,000 or 16.4%.  Forgings product line net sales increased
34.7% compared to the first nine months of 1994.  This product line has
increased sales to commercial aircraft and medical instrument manufacturers. 
Another product line benefitting from a rejuvenated aircraft market and some
increase in commercial business is the sand mold castings product line.  Sales
of sand mold castings for 1995 are running 17.8% ahead of 1994.  Shipments of
magnesium/thorium castings, and castings for various helicopter programs, have
increased in the current year.  Investment castings product line, benefitting
from an expanded economy through most of 1995, realized a 20.2% improvement in
sales.  Sales in the wire forming product line were about the same as in 1994
which was considered to be a strong performance.

  Cost of goods sold for the first nine months of 1995 was $63,504,000, or 82.5%

of net sales, compared to $53,363,000, or 80.6% of net sales, for the first nine
months of 1994, increasing principally because of volume.  The 1994 cost of
goods sold was credited with a recovery of $443,000 from processing thoriated
magnesium.  The 1995 cost of sales was impacted by an unusually large workmen's
compensation claim in the second quarter, and by substantial raw material price
increases some of which could not be passed on to customers.  


                  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS        Form 10-Q
                 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS      Page 11  
                                    (Contd.)

  Selling, general and administrative expenses totalled $9,975,000, or 13.0% of
net sales, for year-to-date 1995, compared to $9,349,000, or 14.1% of net sales,
for the like period of 1994.  Cost control programs, concentrating on a
reduction of expenses and improvements in efficiency, have had a positive effect
on selling, general and administrative expenses.  Initiated in response to the
slow economy in the early 1990's, these programs are still an important part of
the operating plans in 1995.

  Other income for the nine months ended September 30, 1995 was $812,000
compared to $985,000 for the same period of 1994, a decrease of $173,000.  Other
income for 1994 included a $251,000 gain on the sale of assets related to an
operation closed in prior years.  Interest income on marketable securities was
$920,000 for 1995, an increase of $168,000 over 1994 due to interest rate
increases.

  Net income for the first nine months of 1995 was $2,632,000 or $.31 per share
compared to $2,710,000 or $.32 per share for the same period of 1994, a decrease
of $78,000.


  The backlog of orders at September 30, 1995 was $31,703,000, an increase of
$5,616,000 over September 30, 1994 backlog of $26,087,000.  Industrial Tools
business segment backlog at September 30, 1995 was $5,660,000 an increase of
$1,800,000 or 46.6% over the same date last year.  Backlog of tungsten carbide
cutting tools increased 34.3%, primarily due to tungsten carbide inserts.  The
introduction of VR/Notch inserts late in 1994, and the introduction of diamond
tipped inserts early in 1995, have spurred a growth in sales orders.  General
improvement of the economy has also had a positive effect on customer orders. 
Coal mining tools product line backlog increased from September 30, 1994. 
However, a change in month-end backlog of mining tools is not a reliable
indicator of future activity as a majority of the sales are off-the-shelf.  Wear
parts product lines, especially drill parts, also experienced a backlog
increase.  Metal Fabrications business segment backlog at September 30, 1995 was
$26,043,000 compared to $22,227,000 at September 30, 1994, an increase of
$3,816,000.  Forgings product line backlog is up 42.0% as orders from commercial
aircraft and medical instrument manufacturers have increased.  Sand mold
castings product line backlog is up 21.4% due almost exclusively to orders for
commercial small airplane cylinder heads.  A new production process utilizing
the cell manufacturing concept is being installed to attract commercial
customers.  Orders received for cylinder heads, and the impact on the order
backlog of this product line, should translate into improved revenue performance
for this product line.  Investment casting product line backlog decreased 28.8%
from September 30, 1994.  A softening of the general economy in the third
quarter, and increased price competition for available business, have resulted
in lower order volume. 

Outlook

  Modernization of the Company's production processes, new product development,
and investment in capital equipment have established a foundation for growth,
directed primarily at commercial markets.  The Company has a strong balance
sheet, which allows for application of funds as required for anticipated
acquisitions and production facility expansions.  The Company has utilized, and
is constantly seeking, funding assistance on favorable terms from states and

municipalities for expansion of production capabilities.  Cost control programs
remain active in all operating plans throughout the Company.


                  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS        Form 10-Q
                 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS      Page 12  
                                    (Contd.)

  The formerly defense-dependent operating units are continuing to place primary
focus on a transition from military to commercial markets.  Capital equipment
investment has been initiated and modernized production techniques employed to
facilitate this transition.  These operating units are beginning to realize the
benefits from these efforts as increased sales and orders have materialized. 


Liquidity and Capital Resources

  Cash and cash equivalents decreased $1,712,000 from a December 31, 1994
balance of $9,429,000 to $7,717,000 at September 30, 1995.  Net income and
depreciation provided cash flow of $2,632,000 and $1,490,000, respectively. 
Capital expenditures in 1995 totalled $2,616,000.  Financing activities included
proceeds from long-term debt of $295,000.  Dividend payments amounted to
$2,580,000.

  During the remainder of the year, it is expected that sufficient cash will be
generated from operations to cover normal operating requirements.  If the need
arises, the Company has strong, long-term relationships with several large
banking institutions.

  Funding assistance by states and municipalities is investigated when any
significant expenditures are proposed.  A $295,000 loan was received in 1995
from the State of Iowa for production improvements and modernization at our sand
mold casting operation. 

  At September 30, 1995, the Company had $982,000 of current marketable
securities and $4,625,000 of non-current marketable securities, classified as
available-for-sale, invested in U.S. government securities and municipal bonds. 
The liquidity of these securities is readily available.  The non-current
marketable securities classified as held-to-maturity, with a book value of
$9,979,000 and a fair value of $9,934,000, are U.S. Treasury Notes.  The intent
of the Company is to hold these notes to maturity.

  On November 10, 1995, the Company announced the suspension of its regular
quarterly cash dividend pending review of its dividend policy relative to
comparable publicly traded companies and its capital requirements.  The Board of
Directors believes it is in the best interests of shareholders to conserve
capital at this time in light of anticipated acquisitions and production
facility expansions as well as uncertainties surrounding funding requirements
for decommissioning at the Company's discontinued operations at Muskogee,
Oklahoma.  While management believes that its current reserve for environmental
clean-up for discontinued operations is adequate, the Company has decided to
take this action pending greater certainty as to the costs which ultimately may
be incurred.

  At September 30, 1995, the Company had established reserves of $4,209,000 for
environmental clean-up costs for discontinued operations.  The Company, in
association with outside consultants, has developed a decommissioning plan for
the site involved, and has submitted that plan and a related decommissioning
funding plan to the Nuclear Regulatory Commission ("NRC") as required by law. 
Prior to decommissioning, the Company proposes to construct and operate for
approximately eight to ten years a commercial plant to complete the processing
of residues currently contained in storage ponds at the site, which would
materially reduce the amount of radioactive materials to be disposed of during
decommissioning.  In conjunction with construction of the processing plant, the

                  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS        Form 10-Q

                 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS      Page 13  
                                    (Contd.)

Company would modify the wastewater treatment plant at the site and install a
drainage system.  Decommissioning would be comprised of construction of an
engineered on-site cell for containment of contaminated soils; consolidation and
stabilization of the contaminated soils in the containment cell; and the
performance of required plant surveys and characterizations after residue
processing ceases to determine whether additional contaminated soils exist which
may require remediation.

  The Company has applied for an amendment to its current NRC license and for a
revision to its current wastewater discharge permit to allow construction and
operation of the proposed processing plant, and believes that these regulatory
authorizations will be issued in the near future.  Preliminary engineering,
design and feasibility studies have been completed for the proposed processing
plant, which would extract commercially valuable materials such as tantalum,
columbium, scandium and other rare earth and rare metal elements from the
feedstock residues.  The Company has engaged a process design expert to confirm
the viability of the proposed plant.  The estimated cost of construction is
approximately $10 million.  The estimated value of materials to be extracted is
based on analysis of samples taken from the residues and a valuation of such
materials using current market prices discounted to reflect possible price
decreases, including those which could result from the increased quantities of
certain of these materials made available for sale.  The estimated costs of
residue processing were developed by Company personnel and independent
consultants using third party evaluations based on the pilot testing performed. 
Residue processing is expected to start approximately a year after licensing
approval is received.  The provisions for discontinued operations reflect
management's belief that the current value of the extracted materials will at
least equal the estimated cost of construction and costs of processing,
including estimated costs for disposal of waste generated by the process. 
However, there can be no assurance as to the level of demand for certain of the
extracted materials or the actual prices which may be obtained for them, which
could vary over time.

  In October 1995 the NRC advised the Company that a decommissioning funding
plan cost estimate based on on-site disposal of most of the radioactive wastes
at the site is appropriate to consider at this time.  The NRC cautioned the
Company, however, that on-site disposal may require preparation of an
Environmental Impact Statement and that, in addition to the required NRC
approval, local and other federal agencies may have to be satisfied that the
Company's disposal plan is sound.  Such approval process can be expected to
extend over a number of years.  Management believes that a decommissioning plan
including on-site containment will ultimately be acceptable to the appropriate
regulatory authorities, based on current and proposed NRC regulations and a
provision of the Nuclear Waste Policy Act of 1982 requiring the Department of
Energy to take title to certain "special sites" which may include the Company's
site; however, there is no assurance that a plan providing for on-site
containment will ultimately be approved.  Implementation of a decommissioning
plan for the Company's site which includes off-site disposal may not be
financially feasible.

  The NRC's decommissioning regulations require licensees to estimate the cost
for decommissioning and to assure in advance that adequate funds will be
available to cover those costs.  The NRC's October letter requested the Company
to submit a decommissioning funding plan contemplating on-site containment and
stated that the cost of residue processing should be included in the Company's
cost estimate.  The Company is currently developing such a plan.  The initial
level of assurance is estimated to be at least $15 million.

                  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS        Form 10-Q
                 OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS      Page 14  
                                    (Contd.)

  NRC regulations identify a number of acceptable methods for assuring funds for
decommissioning, including surety instruments such as letters of credit, cash
deposits and combinations thereof.  Accordingly, the Company's available cash
and/or borrowing capacity will be reduced by the amount of funding assurance as
required at any particular time.  As the decommissioning plan is implemented,
deposited funds or the amount of any surety instruments may be reduced, provided
the Company can demonstrate the sufficiency of the remaining funds or surety to
assure the completion of decommissioning.


  Based upon continuing assessment of the proposed decommissioning plan, taking
into consideration the most current information, existing technology and
regulations in effect, management believes that the amounts reserved at
September 30, 1995 are adequate to cover the costs of environmental clean-up for
discontinued operations and that the Company has the ability to meet the NRC's
decommissioning funding assurance requirements.

  The remaining land and buildings of the Company's former Precision Sheet Metal
(PSM) operation within the Metal Fabrications business segment are carried as
Other Assets - Property held for sale.  The cost of preparing the property for
sale, principally environmental clean-up, will be capitalized.  Management
believes that proceeds from the sale of the property will be adequate to recover
its costs, including costs of preparing the property for sale.  

  The Company's Escast operation, located in Addison, IL, included in the Metal
Fabrications business segment, has been named as a responsible party for the
clean-up costs of certain hazardous wastes located on-site.  A cost sharing
agreement with the former owner of Escast is in place for any future clean-up
costs.  At this time, the amount of the clean-up costs is not fixed and
determinable.  However, the Company believes the established reserves of
$598,000 are adequate to cover its share of the clean-up costs.

  Environmental matters arising at other operating units are routinely reviewed
and handled through operations.  The Company believes that the ultimate
disposition of any other pending environmental matters will not have a material
adverse effect upon the consolidated financial position of the Company.


                                                                       Form 10-Q
                                                                       Page 15  

                           PART II - OTHER INFORMATION

     Item 6.    Exhibits and Reports on Form 8-K

     b)   No reports on Form 8-K were filed during the quarter ended
          September 30, 1995.


                                                                       Form 10-Q
                                                                       Page 16  







                                   SIGNATURES



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.


                                       Fansteel Inc.                        
                                       (Registrant)





Date -    11/13/95                    /s/ William D. Jarosz                 
                                          William D. Jarosz
                                President and Chief Executive Officer









Date -    11/13/95                  /s/ R. Michael McEntee                  
                                        R. Michael McEntee
                             Vice President and Chief Financial Officer