SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarter ended January 31, 1998
Commission File Number: 0-5105




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



                 DELAWARE
                13-2636669
       (State or other jurisdiction of
             (I.R.S. Employer
      incorporation or organization)
             Identification No.)

                     
    No. 9 Via Parigi, Palm Beach, Florida
                   33480
 (Address of principal executive offices)
                (Zip code)

                     
Registrant's telephone number, including area code (561) 655-9590


                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.  Yes  X   No          

At January 31, 1998, 2,738,264 shares of common stock of the
Registrant were issued and outstanding. 











MILASTAR CORPORATION AND SUBSIDIARIES



                    PART I

Item 1.  Financial Statements

    The condensed financial statements included herein have
been prepared by Milastar Corporation (the "Company")
without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission.  Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not
misleading.  It is suggested that these condensed financial
statements be read in conjunction with the financial statements
and the notes thereto included in the Company's annual report
on Form 10-K for the fiscal year ended April 30, 1997.

    The condensed financial statements included herein,
which are unaudited, include, in the opinion of management, all
adjustments (consisting only of normal recurring accruals)
necessary to present fairly the financial position and results of
operations of the Company for the periods presented.



<TABLE>
<CAPTION>
              MILASTAR CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS

                              ASSETS
                                                              January 31,      April 30,  
                                                                 1998           1997  
                                                            <C>             <C>                
Current assets:
    Cash and cash equivalents. . . . . . . . . . . . . . .      454,000          71,000
  Accounts receivable:
  Trade, less allowance for doubtful accounts of $54,000
   (January 31, 1998) and $35,000 (April 30, 1997) . . . .      889,000       1,151,000
  Other. . . . . . . . . . . . . . . . . . . . . . . . . .       10,000           9,000
  Inventory. . . . . . . . . . . . . . . . . . . . . . . .      137,000         185,000
  Prepaid expenses and other . . . . . . . . . . . . . . .      151,000         153,000
    Total current assets . . . . . . . . . . . . . . . . .    1,641,000       1,569,000

Property, plant and equipment:
  Land . . . . . . . . . . . . . . . . . . . . . . . . . .      199,000         199,000
  Buildings and improvements . . . . . . . . . . . . . . .      768,000         742,000
  Equipment. . . . . . . . . . . . . . . . . . . . . . . .    6,852,000       6,337,000
                                                              7,819,000       7,278,000
  Less accumulated depreciation. . . . . . . . . . . . . .   (3,332,000)     (2,825,000)
                                                              4,487,000       4,453,000
Other assets:
  Non-compete agreements . . . . . . . . . . . . . . . . .       52,000          71,000

  Total assets . . . . . . . . . . . . . . . . . . . . . .    6,180,000       6,093,000
</TABLE>
<TABLE>
<CAPTION>
               LIABILITIES AND STOCKHOLDERS' EQUITY
                                                            <C>            <C>
Current liabilities:
  Notes payable to stockholders. . . . . . . . . . . . . .      165,000         165,000
  Current maturities of long-term debt . . . . . . . . . .      342,000         342,000
  Accounts payable . . . . . . . . . . . . . . . . . . . .      147,000         426,000
  Income taxes payable . . . . . . . . . . . . . . . . . .      119,000         119,000
  Accrued payroll and benefits . . . . . . . . . . . . . .      272,000         243,000
  Accrued real estate taxes. . . . . . . . . . . . . . . .       51,000          68,000
  Other accrued liabilities. . . . . . . . . . . . . . . .      151,000         130,000
   Total current liabilities . . . . . . . . . . . . . . .    1,247,000       1,493,000

Long-term debt, less current maturities. . . . . . . . . .    1,027,000       1,072,000

   Total liabilities . . . . . . . . . . . . . . . . . . .    2,274,000       2,565,000

Stockholders' equity:
  Preferred stock, $1.00 par value; authorized 5,000,000 
   shares, none issued . . . . . . . . . . . . . . . . . . 
  Common stock,  $.05 par value;  Authorized 7,500,000 
   shares, issued and outstanding 2,728,264 shares at 
   January 31, 1998 and April 30, 1997 . . . . . . . . . .      137,000         137,000 
  Note receivable from officer . . . . . . . . . . . . . .      (20,000)        (20,000)
  Additional paid-in capital . . . . . . . . . . . . . . .    1,666,000       1,666,000 
  Retained earnings. . . . . . . . . . . . . . . . . . . .    2,123,000       1,745,000 
     Total stockholders' equity. . . . . . . . . . . . . .    3,906,000       3,528,000 
  
  Total liabilities and stockholders' equity . . . . . . .    6,180,000       6,093,000 
</TABLE>
<TABLE>
<CAPTION>
                   MILASTAR CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)


                                             Three Months Ended         Nine Months Ended
                                                 January 31,               January 31,
                                             1998          1997        1998          1997          
                                         <C>          <C>          <C>          <C>   
   Net Sales . . . . . . . . . . . . . .   1,689,000    1,672,000    6,054,000    5,412,000
   Cost of Sales . . . . . . . . . . . .   1,279,000    1,315,000    4,234,000    4,101,000

   Gross margin. . . . . . . . . . . . .     410,000      357,000    1,820,000    1,311,000
   Selling general and administrative 
    expenses . . . . . . . . . . . . . .     370,000      415,000    1,321,000    1,320,000
   Amortization of non-compete 
    agreements . . . . . . . . . . . . .       6,000        8,000       18,000       48,000

   Operating income. . . . . . . . . . .      34,000      (66,000)     481,000      (57,000) 

   Other income (expense):
    Dividend and interest income . . . .       6,000        3,000       11,000        8,000
    Interest expense . . . . . . . . . .     (36,000)     (38,000)    (107,000)    (107,000)
    Net gain (loss) on sale of property 
     and equipment . . . . . . . . . . .                   44,000                    (9,000)
    Unrealized gain (loss) on valuation 
     of building held for sale                                                       43,000 
   Total other income (expense). . . . .     (30,000)       9,000      (96,000)     (65,000)
 
   Income (loss) before income taxes . .       4,000      (57,000)     385,000     (122,000)
   Provision (benefit) for income taxes.       2,000                     7,000       (8,000)

   Net income (loss) . . . . . . . . . .       2,000      (57,000)     378,000     (114,000)

   Net income (loss) per common share. .         .00         (.02)         .14         (.04)  

   Weighted average number of shares
    outstanding during the period. . . .   2,738,264    2,738,264     2,738,264   2,738,264
</TABLE>
<TABLE>
<CAPTION>
              MILASTAR CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF CASH FLOWS
                  Nine Months Ended January 31,
                           (Unaudited)

                                                          
                                                        1998           1997
                                                  <C>            <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss). . . . . . . . . . . . . . . .     378,000       (114,000)
  Adjustments to reconcile net income to net cash
  provided by operating activities:
   Depreciation and amortization . . . . . . . . .     525,000        521,000
   Net loss on sale of property and equipment. . .                      9,000 
   Unrealized market loss (gain) on valuation 
    of property held for sale. . . . . . . . . . .                    (43,000)

  Changes in operating assets and liabilities:
   Accounts receivable . . . . . . . . . . . . . .     261,000        (48,000)
   Inventory . . . . . . . . . . . . . . . . . . .      49,000         73,000 
   Prepaid supplies and other assets . . . . . . .       2,000         11,000 
   Accounts payable and accrued expenses . . . . .    (245,000)      (119,000)
   Income tax refund, net. . . . . . . . . . . . .                    118,000 

  Net cash provided by operating activities. . . .     970,000        408,000 

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property, plant and equipment . . .    (541,000)    (1,081,000)
  Proceeds from sale of property and equipment . .                    294,000 

  Net cash used in investing activities. . . . . .    (541,000)      (787,000)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from bank line of credit. . . . . . . .                     25,000 
  Repayments on bank line of credit. . . . . . . .                    (85,000)
  Proceeds from issuance of long-term debt . . . .      155,000       564,000 
  Principal payments on long-term debt . . . . . .     (201,000)     (152,000)
  Repayments on note payable - stockholder . . . .                    (87,000)
  Proceeds from issuance of note payable -
   stockholder . . . . . . . . . . . . . . . . . .                      6,000

  Net cash provided by financing activities. . . .      (46,000)      271,000

NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS . . . . . . . . . . . . . . . . . .      383,000      (108,000) 
CASH AND CASH EQUIVALENTS BALANCE AT BEGINNING
   OF YEAR . . . . . . . . . . . . . . . . . . . .       71,000       144,000 
CASH AND CASH EQUIVALENTS BALANCE AT END OF
   THE THIRD QUARTER . . . . . . . . . . . . . . .      454,000        36,000 

Supplemental disclosures of cash flow information:
  Cash paid during the first three quarters for:
    Interest. . . . . . . . . . . . . . . . . .         105,000       154,000 

    Income taxes. . . . . . . . . . . . . . . .           7,000         3,000
</TABLE>
 
MILASTAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                             
  Nature of business - Milastar Corporation ("Milastar" and sometimes 
the "Company") is primarily involved in selling special metallurgical
and secondary metal processing services to a diversified list of customers 
located in the greater Midwest and New England regions who manufacture a 
wide variety of end-products and depend upon out- sourcing of specialized 
processing of their metal components.  The Company extends credit to many 
of its customers. 
                             
  Principles of consolidation - The consolidated financial statements include 
the accounts of the Company and its wholly owned subsidiaries, Flame Metals 
Processing Corporation ("Flame Metals"), Milastar Services Corporation and 
Flame Metals' wholly owned subsidiary New England Metal Treating Corporation 
("New England Metal").  In consolidation, all significant intercompany
accounts and transactions are eliminated.
                             
  Cash and cash equivalents - The Company considers cash equivalents to 
include all investments purchased with an original maturity of 90 or
fewer days.
                             
  Marketable securities and other investments - On May 1, 1994 the Company 
adopted the provisions of Statement of Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities (Statement 
115).  Under Statement 115, the Company classifies its debt and equity 
securities in one of three categories: trading, available-for-sale, or 
held-to-maturity.  Trading securities are bought and held principally for 
the purpose of selling them in the near term.  Held-to-maturity securities 
are those securities in which the Company has the ability and intent to hold 
the security until maturity.  All other securities not included in trading 
or held-to-maturity are classified as available-for-sale.  Trading and 
available-for-sale securities are recorded at fair value.  Held-to-maturity 
securities are recorded at amortized cost, adjusted for the amortization or 
accretion of premiums of discounts.  Unrealized holding gains and losses on
trading securities are included in earnings.  Unrealized holding gains and 
losses on available-for-sale securities are excluded from earnings and are 
reported as a separate component of stockholders' equity until realized.  
Transfers of securities between categories are recorded at fair value at the 
date of transfer.  A decline in the market value of any available-for-sale
or held-to-maturity security below cost that is deemed other than temporary 
is charged to earnings resulting in the establishment of a new cost basis 
for the security.  At April 30, 1994 marketable securities were carried at 
the lower of aggregate cost or market.
                             
  Inventory - Inventory is carried at cost as determined by the First-In-
First-Out (FIFO) method.
                             
  Prepaid supplies - Prepaid supplies are expensed as used.
                             
  Property, plant and equipment - Property, plant and equipment are carried 
at cost.  Depreciation is computed using the straight-line method.  When
assets are retired or otherwise disposed of, the cost and related 
depreciation are removed from the accounts, and any gain or loss is reflected
in income for the period.  The cost of maintenance and repairs is charged to 
income as incurred, whereas significant renewals and betterments are 
capitalized and deductions are made for retirements resulting from the 
renewals or betterments.
                             
     The estimated useful lives of the fixed assets are as follows:
                                                    
         Buildings . . . . . . . 35 years
         Equipment . . . . . . . 5 to 12 years
         Vehicles. . . . . . . . 3 to 5 years

  Other assets - Other assets are comprised of a four-year non-compete 
agreement which is being amortized over 48 months using the straight-line
method.

  Income taxes - The Company accounts for income taxes under Financial 
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement 109). 
Statement 109 requires the use of the asset and liability method of 
accounting for income taxes.  Under the asset and liability method of 
Statement 109, deferred tax assets and liabilities are recognized for the 
estimated future tax consequences attributable to differences between the 
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.  Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary 
differences are expected to be recovered or settled.  Under Statement 109, 
the effect on deferred tax assets and liabilities of a change in tax rates 
is recognized in income in the period that includes the enactment date.

  Accounting estimates - The preparation of financial statements in 
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets 
and liabilities and disclosure of contingent assets and liabilities at the 
date of the financial statements and the reported amounts of revenues and 
expenses during the reporting period.  Actual results could differ from those
estimates.

  Fair value of financial instruments - The Company's financial instruments 
are recorded on its balance sheet.  The carrying amount for cash, accounts 
receivable, accounts payable, and accrued expenses approximates fair value 
due to the immediate or short-term maturity of these financial instruments. 
The fair value of notes receivable and notes payable approximate their 
carrying value.

  Impairment of long-lived assets and long-lived assets to be disposed of - 
The Company adopted the provisions of SFAS No. 121, Accounting for the 
Impairment of Long-lived Assets and the Long-lived Assets to be Disposed 
of (SFAS No. 121), on May 1, 1996.  SFAS No. 121 requires that long-lived 
assets and certain identifiable intangibles be reviewed for impairment 
whenever events or changes in circumstances indicate that the carrying 
amount of an asset may not be recoverable.  Recoverability of assets to be 
held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset.  If such 
assets are considered to be impaired, the impairment to be recognized is 
measured by the amount by which the carrying amount of the assets exceeds 
the fair value of the assets.  Assets to be disposed of are reported at the 
lower of the carrying amount or fair value less costs to sell.  Adoption of
SFAS No. 121 had no impact on the Company's financial position or results 
of operations.

  Stock-based compensation - The Company adopted SFAS No. 123, Accounting 
for Stock-Based Compensation, which permits entities to recognize as expense 
over the vesting period the fair value of all stock-based awards on the date 
of grant on May 1, 1996.  Alternatively, SFAS No. 123 allows entities to 
continue to apply the provisions of APB Opinion No. 25, Accounting for Stock 
Issued to Employees, and provide certain pro forma information.  APB Opinion
No. 25 requires that compensation expense be recorded on the date of grant 
only if the current market price of the underlying stock exceeds the 
exercise price.  The Company has elected to continue to apply the provisions 
of APB Opinion No. 25 and provide the pro forma disclosure provisions of 
SFAS No. 123.


2  RELATED PARTY TRANSACTIONS

   Notes Receivable

In fiscal 1993, with the encouragement of the Company, Michael McGurk, 
President, Chief Operating Officer and a director of the Company bought
15,000 shares of Milastar Class A Common Stock and entered into a note 
agreement with the Company to finance this purchase.  The note of $20,000 
is dated August 15, 1992 and bears interest at 50 basis points over NYC 
Prime adjustable upward or downward at the end of each six-month period, 
which interest rate is subject to an 8% "cap" during the life of the loan. 
Interest on the principal is payable each year on the anniversary date of 
the note.  The principal portion of the note that was originally due on 
August 15, 1995 has been extended until August 15, 1999.  The Company is 
holding Mr. McGurk's 15,000 shares of Milastar Class A Common Stock as 
collateral for the note.  Total interest income related to this note for 
fiscal quarters ended January 31, 1998 and 1997 was $600 and $500, 
respectively.

   Notes Payable

During fiscal 1995 the Company entered into a series of note payable 
transactions, which at January 31, 1998 had a balance of $75,000, including 
accrued interest, payable to J. Russell Duncan, Chairman of the Board and a 
director of the Company.  The notes bear an interest rate of 8% and are 
payable on demand.  The Company classifies the notes payable as a current 
liability.  Total interest expense related to the notes payable for the 
fiscal quarters ended January 31, 1998 and 1997 was $1,500 and $2,700, 
respectively.

During fiscal 1996 the Company entered into a $100,000 note payable to 
L. Michael McGurk, President, Chief Operating Officer and a director of the
Company.  The note bears an interest rate of 8.7% and is payable on demand.  
The Company classifies the note payable as a current liability.  Total 
interest expense related to this note payable for both fiscal quarters ended 
January 31, 1998 and 1997 was $2,100.

 
3  INCOME TAXES

The Company has provided for current income taxes on earnings at the 
appropriate statutory state and federal rates applicable to such earnings, 
and any deviation is solely the result of book/tax differences arising
mainly from the recognition of tax depreciation expense.


4  EARNINGS PER COMMON SHARE

The computation of earnings per share is as follows:
       
                                              Three Months Ended January  31,
                                                       1998        1997
       
      Weighted average number of shares of 
       series A Common stock outstanding . . . .    2,738,264   2,738,264

      Dilutive effect of stock options after 
       application of treasury stock method. . .
       
      Weighted average number of shares of 
       Class A common stock outstanding during 
       the period. . . . . . . . . . . . . . . .    2,738,264   2,738,264


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

Results of Operations

   Three Months Ended January 31, 1998 Compared to Three Months Ended January
31,1997 - The Company recorded sales of $1,689,000 during the third quarter of 
fiscal 1998 as compared to $1,672,000 for the same period last year, a 
$17,000 (1%) increase.  The sales increase was primarily attributable to 
immaterial fluctuations.

   Cost of sales of $1,279,000 (76% of net sales) decreased $36,000 (3%) 
from $1,315,000 (79% of net sales) for the same period a year earlier.  The 
decrease relative to sales is the result of the continued improvement in labor 
efficiencies.  Gross margin increased to $410,000 as compared to $357,000 for 
the prior year third quarter.

   Selling, general and administrative (SG&A) expenses of $370,000 (22% of 
net sales) decreased $45,000 (11%) from $415,000 (25% of net sales) for the
same period a year earlier.  The decrease in SG&A expenses as a percentage of
sales is the result of management's continued focus on overhead costs.  
Management's goal is to reduce or hold constant SG&A expenses while 
increasing sales.

   The Company recorded operating income of $34,000 in the third quarter of
fiscal 1998 as compared to an operating loss of $66,000 recorded in the prior
year third quarter.  The improvement in operating performance was primarily 
due to a combination of increased sales and reduction of cost of sales as a 
percentage of sales.  Management continues to reduce labor costs relative to 
sales and strives to increase the Company's revenue per employee.

   Total other expense amounted to $30,000 in the third quarter of fiscal 
1998 as compared to other income of $9,000 in the third quarter of last year.
The other expense in both third quarters was primarily due to interest 
expense, with the previous quarter expense being off-set by a gain of 
$44,000 on the sale of a building.

   The Company recorded net income of $2,000 in the third quarter of fiscal 
1998 as compared to a $57,000 net loss in the prior year third quarter.  Net 
income in the current third quarter was primarily due to increased sales and 
a reduction of cost of sales as a percentage of sales.

   Nine Months Ended January 31, 1998 Compared to Nine Months Ended January 
31, 1997 - The Company recorded sales of $6,054,000 during the first three 
quarters of fiscal 1998 as compared to $5,412,000 for the same period last 
year, a $642,000 (12%) increase.  The sales increase was primarily 
attributable to the installation of new equipment and increased demand with 
existing customers.

   Cost of sales of $4,234,000 (70% of net sales) increased $133,000 (3%) 
from $4,101,000 (76% of net sales) for the same period a year earlier.  The 
decrease relative to sales is the result of improved labor efficiencies and 
the absorption of fixed costs.  Gross margin increased to $1,820,000 compared
to $1,311,000 in the prior year first three quarters.

   Selling, general and administrative expenses of $1,321,000 (22% of net 
sales) increased $1,000 (1%) from $1,320,000 (24% of net sales) for the same 
period a year earlier.  The decrease in SG&A expenses as a percentage of 
sales is the result of management's commitment to reduce or hold constant 
SG&A expenses while increasing sales.

   The Company recorded operating income of $481,000 in the first three 
quarters of fiscal 1998 as compared to an operating loss of $57,000 recorded 
in the same period last year.  The significant improvement in operating 
performance was primarily due to a combination of increased sales and 
reduction of cost of sales as a percentage of sales.  Management continues 
to reduce labor costs relative to sales and strives to increase the Company's
revenue per employee.

   Total other expense amounted to $96,000 in the first three quarters of 
fiscal 1998 as compared to other expense of $65,000 in the same period last
year.  The other expense in both periods was primarily due to interest 
expense.

   The Company recorded net income of $378,000 in the first three quarters of
fiscal 1998 as compared to a $114,000 net loss in the first three quarters of 
the prior year.  Net income in the first three quarters of fiscal 1998 was 
primarily due to increased sales and a reduction of cost of sales as a 
percentage of sales.

Liquidity and Capital Resources

   At January 31, 1998, the Company's working capital was $394,000 compared 
to $76,000 at April 30, 1997 and the ratio of current assets to current 
liabilities was 1.3 to 1 and 1.1 to 1, respectively.  Cash, marketable 
securities and other investments and current receivables represented 
82% (78% at April 30, 1997) and 22% (20% at April 30, 1997) of total current 
assets and total assets, respectively.  During the first three quarters of 
fiscal 1998, net cash provided by operating activities amounted to $970,000
compared to $408,000 provided by operating activities in the first three 
quarters of fiscal 1997.  Working capital requirements for the first three 
quarters of fiscal 1998 were funded primarily from available cash and cash 
generated from operations.



                   PART II

Items 1 thru 5

       No response to these items is furnished, since in each case the
       appropriate response would be either not applicable or none.

Item 6.  
       Exhibits and Reports on Form 8-K

       (a)   Exhibits:  None

       (b)   Reports on Form 8-K:  None    


MILASTAR CORPORATION AND SUBSIDIARIES
                       

S I G N A T U R E


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


MILASTAR CORPORATION


/s/ J. RUSSELL DUNCAN
J. Russell Duncan
Chairman of the Board and Chief Executive Officer
Dated: March 6, 1998