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                     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 QUARTERLY PERIOD ENDED JUNE 30, 1998

                       Commission file number 1-3605




                   KAISER ALUMINUM & CHEMICAL CORPORATION
           (Exact name of registrant as specified in its charter)


              DELAWARE                               94-0928288
      (State of incorporation)            (I.R.S. Employer Identification
                                             No.)


        6177 SUNOL BOULEVARD, PLEASANTON, CALIFORNIA     94566-7769
          (Address of principal executive offices)       (Zip Code)


                               (925) 462-1122
            (Registrant's telephone number, including area code)





     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 July 27, 1998, the registrant had 46,171,365 shares of Common Stock
outstanding.





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      KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

                       PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS
         --------------------

                        CONSOLIDATED BALANCE SHEETS
                          (In millions of dollars)

<TABLE>

<CAPTION>
                                                             June 30,    December 31,
                                                                 1998            1997
                                                       ------------------------------
<S>                                                    <C>             <C>
                         ASSETS                          (Unaudited)
Current assets:
     Cash and cash equivalents                         $       113.4    $       15.8 
     Receivables                                               300.0           345.3 
     Inventories                                               506.8           568.3 
     Prepaid expenses and other current assets                 145.6           121.3 
                                                       ------------------------------
          Total current assets                               1,065.8         1,050.7 

Investments in and advances to unconsolidated
     affiliates                                                141.3           148.6 
Property, plant, and equipment - net                         1,159.5         1,171.8 
Deferred income taxes                                          320.6           329.0 
Other assets                                                   328.6           317.2 
                                                       ------------------------------

          Total                                        $     3,015.8    $    3,017.3 
                                                       ==============================

           LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                  $       156.7    $      176.2 
     Accrued interest                                           37.3            37.6 
     Accrued salaries, wages, and related expenses              85.0            97.9 
     Accrued postretirement medical benefit obligation
          - current portion                                     45.3            45.3 
     Other accrued liabilities                                 160.6           145.9 
     Payable to affiliates                                      78.5            82.4 
     Long-term debt - current portion                            2.0             8.8 
                                                       ------------------------------
          Total current liabilities                            565.4           594.1 

Long-term liabilities                                          507.2           492.0 
Accrued postretirement medical benefit obligation              709.2           720.3 
Long-term debt                                                 962.5           962.9 
Minority interests                                              99.3            98.4 
Redeemable preference stock                                     19.8            27.7 
Commitments and contingencies
Stockholders' equity:
     Preference stock                                            1.6             1.6 
     Common stock                                               15.4            15.4 
     Additional capital                                      1,996.5         1,939.8 
     Accumulated deficit                                      (123.3)         (152.3)
     Less: Note receivable from parent                      (1,737.8)       (1,682.6)
                                                       ------------------------------
          Total stockholders' equity                           152.4           121.9 
                                                       ------------------------------

               Total                                   $     3,015.8   $     3,017.3 
                                                       ==============================

</TABLE>


The accompanying notes to interim consolidated financial statements are an 
     integral part of these statements.

      KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

                     STATEMENTS OF CONSOLIDATED INCOME
                                (Unaudited)
                          (In millions of dollars)

<TABLE>

<CAPTION>
                                                                Quarter Ended                Six Months Ended
                                                                  June 30,                       June 30,
                                                       ------------------------------ ------------------------------
                                                                 1998            1997           1998            1997
                                                       ------------------------------ ------------------------------
<S>                                                    <C>             <C>            <C>             <C>
Net sales                                              $       614.8   $       597.1  $     1,211.8   $     1,144.5 
                                                       ------------------------------ ------------------------------

Costs and expenses:
     Cost of products sold                                     506.1           489.3        1,005.7           950.0 
     Depreciation                                               22.3            22.8           45.2            45.9 
     Selling, administrative, research and
          development, and general                              31.0            29.7           60.5            60.5 
     Restructuring of operations                                -               19.7           -               19.7 
                                                       ------------------------------ ------------------------------
               Total costs and expenses                        559.4           561.5        1,111.4         1,076.1 
                                                       ------------------------------ ------------------------------

Operating income                                                55.4            35.6          100.4            68.4 

Other income (expense):
     Interest expense                                          (26.9)          (28.2)         (54.9)          (55.9)
     Other - net                                                (2.4)           (3.4)          (1.8)            (.8)
                                                       ------------------------------ ------------------------------

Income before income taxes and minority interests               26.1             4.0           43.7            11.7 

(Provision) benefit for income taxes                            (9.0)           11.0          (15.2)            8.1 

Minority interests                                                .3             (.4)           1.3             (.9)
                                                       ------------------------------ ------------------------------

Net income                                             $        17.4   $        14.6  $        29.8   $        18.9 
                                                       ============================== ==============================

</TABLE>


The accompanying notes to interim consolidated financial statements are an 
     integral part of these statements.

      KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

                   STATEMENTS OF CONSOLIDATED CASH FLOWS
                                (Unaudited)
                          (In millions of dollars)

<TABLE>

<CAPTION>
                                                                   Six Months Ended
                                                                       June 30,
                                                            ------------------------------
                                                                      1998            1997
                                                            ------------------------------
<S>                                                         <C>             <C>
Cash flows from operating activities:
     Net income                                             $        29.8   $        18.9 
     Adjustments to reconcile net income to net cash                      
          provided (used) by operating activities:
          Depreciation                                               45.2            45.9 
          Restructuring of operations                                -               19.7 
          Non-cash benefit for income taxes                          -              (12.5)
          Amortization of excess investment over equity
               in unconsolidated affiliates                           5.1             5.8 
          Amortization of deferred financing costs and
               net discount on long-term debt                         2.0             3.0 
          Undistributed equity in (income) loss of
               unconsolidated affiliates, net of
               distributions                                          1.5            12.0 
          Minority interests                                         (1.3)             .9 
          Decrease (increase) in receivables                         33.1           (49.4)
          Decrease (increase) in inventories                         61.5            (5.5)
          Decrease (increase) in prepaid expenses and
               other assets                                          18.0           (15.7)
          Decrease in accounts payable                              (19.5)          (41.2)
          (Increase) decrease in accrued interest                    (0.3)            2.0 
          Decrease in payable to affiliates and accrued
               liabilities                                          (36.1)          (18.7)
          Increase (decrease) in accrued and deferred
               income taxes                                           5.3            (6.1)
          Other                                                       7.8             (.5)
                                                            ------------------------------
               Net cash provided (used) by operating
                    activities                                      152.1           (41.4)
                                                            ------------------------------

Cash flows from investing activities:
     Net proceeds from disposition of property and
          investments                                                  .2            22.1 
     Capital expenditures                                           (36.7)          (68.8)
     Other                                                           (3.3)           (2.5)
                                                            ------------------------------
               Net cash used by investing activities                (39.8)          (49.2)
                                                            ------------------------------

Cash flows from financing activities:
     Borrowings under revolving credit facility, net                 (7.0)           30.0 
     Borrowings of long-term debt                                    -               19.0 
     Repayments of long-term debt                                    -               (5.1)
     Decrease (increase) in restricted cash, net                      1.2           (10.1)
     Payments to parent                                              -               (4.3)
     Incurrence of financing costs                                   -                (.5)
     Dividends paid                                                   (.4)            (.3)
     Redemption of minority interests' preference stock              (8.5)           (2.0)
                                                            ------------------------------
               Net cash (used) provided by financing
                    activities                                      (14.7)           26.7 
                                                            ------------------------------

Net increase (decrease) in cash and cash equivalents
     during the period                                               97.6           (63.9)
Cash and cash equivalents at beginning of period                     15.8            81.3 
                                                            ------------------------------
Cash and cash equivalents at end of period                  $       113.4   $        17.4 
                                                            ==============================

Supplemental disclosure of cash flow information:
     Interest paid, net of capitalized interest             $        53.2   $        50.9 
     Income taxes paid                                                7.2             8.2 
     Tax allocation payments to Kaiser Aluminum Corporation           1.7              .9 

</TABLE>



The accompanying notes to interim consolidated financial statements are an 
     integral part of these statements.

             NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
       (In millions of dollars, except prices and per share amounts)

1.   GENERAL

     Kaiser Aluminum & Chemical Corporation (the "Company") is the
principal operating subsidiary of Kaiser Aluminum Corporation ("Kaiser"). 
Kaiser is a subsidiary of MAXXAM Inc. ("MAXXAM").  MAXXAM and one of its
wholly owned subsidiaries together own approximately 63% of Kaiser's Common
Stock with the remaining approximately 37% publicly held.

     The foregoing unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X as promulgated by the Securities and
Exchange Commission.  Accordingly, these financial statements do not
include all of the disclosures required by generally accepted accounting
principles for complete financial statements.  These unaudited interim
consolidated financial statements should be read in conjunction with the
audited consolidated financial statements for the year ended December 31,
1997.  In the opinion of management, the unaudited interim consolidated
financial statements furnished herein include all adjustments, all of which
are of a normal recurring nature, necessary for a fair statement of the
results for the interim periods presented.

     The preparation of financial statements in accordance with generally
accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities known to exist as of the
date the financial statements are published, and the reported amounts of
revenues and expenses during the reporting period. Uncertainties with
respect to such estimates and assumptions are inherent in the preparation
of the Company's consolidated financial statements; accordingly, it is
possible that the actual results could differ from these estimates and
assumptions, which could have a material effect on the reported amounts of
the Company's consolidated financial position and results of operations.

     Operating results for the quarter and six-month period ended June 30,
1998, are not necessarily indicative of the results that may be expected
for the year ending December 31, 1998.

     See Note 5 regarding recent accounting pronouncements.

2.   INVENTORIES

     The classification of inventories is as follows:

<TABLE>

<CAPTION>
                                                             June 30,    December 31,
                                                                 1998            1997
                                                       ------------------------------
<S>                                                    <C>             <C>
Finished fabricated aluminum products                  $         89.6  $        103.9
Primary aluminum and work in process                            181.4           226.6
Bauxite and alumina                                             111.6           108.4
Operating supplies and repair and maintenance parts             124.2           129.4
                                                       ------------------------------
     Total                                             $        506.8  $        568.3
                                                       ==============================

</TABLE>

     Substantially all product inventories are stated at last-in, first-out
(LIFO) cost, not in excess of market. Replacement cost is not in excess of
LIFO cost.

3.   CONTINGENCIES

ENVIRONMENTAL CONTINGENCIES
     The Company is subject to a number of environmental laws, to fines or
penalties assessed for alleged breaches of such environmental laws, and to
claims and litigation based upon such laws.  The Company currently is
subject to a number of lawsuits under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments Reauthorization Act of 1986 ("CERCLA"), and, along
with certain other entities, has been named as a potentially responsible
party for remedial costs at certain third-party sites listed on the
National Priorities List under CERCLA.

     Based on the Company's evaluation of these and other environmental
matters, the Company has established environmental accruals primarily
related to potential solid waste disposal and soil and groundwater
remediation matters. At June 30, 1998, the balance of such accruals, which
are primarily included in Long-term liabilities, was $28.6.  These
environmental accruals represent the Company's estimate of costs reasonably
expected to be incurred based on presently enacted laws and regulations,
currently available facts, existing technology, and the Company's
assessment of the likely remediation actions to be taken.  The Company
expects that these remediation actions will be taken over the next several
years and estimates that annual expenditures to be charged to these
environmental accruals will be approximately $2.0 to $9.0 for the years
1998 through 2002 and an aggregate of approximately $7.0 thereafter.

     The Company believes that it has insurance coverage available to
recover certain incurred and future environmental costs and is actively
pursuing claims in this regard.  However, no accruals have been made for
any such insurance recoveries and no assurances can be given that the
Company will be successful in its attempt to recover incurred or future
costs.

     As additional facts are developed and definitive remediation plans and
necessary regulatory approvals for implementation of remediation are
established or alternative technologies are developed, changes in these and
other factors may result in actual costs exceeding the current
environmental accruals.  The Company believes that it is reasonably
possible that costs associated with these environmental matters may exceed
current accruals by amounts that could range, in the aggregate, up to an
estimated $18.0.  As the resolution of these matters is subject to further
regulatory review and approval, no specific assurance can be given as to
when the factors upon which a substantial portion of this estimate is based
can be expected to be resolved.  However, the Company is currently working
to resolve certain of these matters.

     While uncertainties are inherent in the final outcome of these
environmental matters, and it is presently impossible to determine the
actual costs that ultimately may be incurred, management currently believes
that the resolution of such uncertainties should not have a material
adverse effect on the Company's consolidated financial position, results of
operations, or liquidity.

ASBESTOS CONTINGENCIES
     The Company is a defendant in a number of lawsuits, some of which
involve claims of multiple persons, in which the plaintiffs allege that
certain of their injuries were caused by, among other things, exposure to
asbestos during, and as a result of, their employment or association with
the Company or exposure to products containing asbestos produced or sold by
the Company.  The lawsuits generally relate to products the Company has not
manufactured for at least 20 years.  At June 30, 1998, the number of such
claims pending was approximately 83,900, as compared with 77,400 at
December 31, 1997.  In 1997, approximately 15,600 of such claims were
received and 9,300 were settled or dismissed.  During the quarter and six
months ended June 30, 1998, approximately 5,100 and 10,500 of such claims
were received and 2,700 and 4,000 of such claims were settled or dismissed,
respectively.  However, the foregoing claim and settlement figures as of
June 30, 1998, do not reflect the fact that the Company has reached
agreements under which it will settle approximately 22,000 of the pending
asbestos-related claims over an extended period.

     Based on past experience and reasonably anticipated future activity,
the Company has established an accrual for estimated asbestos-related costs
for claims filed and estimated to be filed through 2008.  There are
inherent uncertainties involved in estimating asbestos-related costs, and
the Company's actual costs could exceed or be less than these estimates.
The Company's accrual was calculated based on the current and anticipated
number of asbestos-related claims, the prior timing and amounts of
asbestos-related payments, and the advice of Wharton Levin Ehrmantraut
Klein & Nash, P.A. with respect to the current state of the law related to
asbestos claims.  Accordingly, an estimated asbestos-related cost accrual
of $167.5, before consideration of insurance recoveries, is included
primarily in Long-term liabilities at June 30, 1998. While the Company does
not presently believe there is a reasonable basis for estimating such costs
beyond 2008 and, accordingly, no accrual has been recorded for such costs
which may be incurred beyond 2008, there is a reasonable possibility that
such costs may continue beyond 2008, and such costs may be substantial. 
The Company estimates that annual future cash payments in connection with
such litigation will be approximately $15.0 to $22.0 for each of the years
1998 through 2002, and an aggregate of approximately $83.0 thereafter.

     The Company believes that it has insurance coverage available to
recover a substantial portion of its asbestos-related costs.  While active
coverage litigation has been concluded, the timing and amount of future
recoveries from the insurance carriers that remain at risk will depend on
the pace of claims review and processing by such carriers, and on the
resolution of any disputes which may arise in the course of discussions
regarding coverage under their policies.  The Company believes, based on
prior insurance-related recoveries in respect of asbestos-related claims,
existing insurance policies, and the advice of Thelen Reid & Priest LLP
(formerly Thelen, Marrin, Johnson & Bridges LLP) with respect to applicable
insurance coverage law relating to the terms and conditions of those
policies, that substantial recoveries from the insurance carriers are
probable. Accordingly, an estimated aggregate insurance recovery of $128.1,
determined on the same basis as the asbestos-related cost accrual, is
recorded primarily in Other assets at June 30, 1998.

     Management continues to monitor claims activity, the status of
lawsuits (including settlement initiatives), legislative progress, and
costs incurred in order to ascertain whether an adjustment to the existing
accruals should be made to the extent that historical experience may differ
significantly from the Company's underlying assumptions. While
uncertainties are inherent in the final outcome of these asbestos matters
and it is presently impossible to determine the actual costs that
ultimately may be incurred and insurance recoveries that will be received,
management currently believes that, based on the factors discussed in the
preceding paragraphs, the resolution of asbestos-related uncertainties and
the incurrence of asbestos-related costs net of related insurance
recoveries should not have a material adverse effect on the Company's
consolidated financial position, results of operations, or liquidity.

OTHER CONTINGENCIES
     The Company is involved in various other claims, lawsuits, and other
proceedings relating to a wide variety of matters.  While uncertainties are
inherent in the final outcome of such matters, and it is presently
impossible to determine the actual costs that ultimately may be incurred,
management currently believes that the resolution of such uncertainties and
the incurrence of such costs should not have a material adverse effect on
the Company's consolidated financial position, results of operations, or
liquidity.

     See Note 10 of the Notes to Consolidated Financial Statements for the
year ended December 31, 1997.

4.   DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING PROGRAMS

     At June 30, 1998, the net unrealized gain on the Company's position in
aluminum forward sales and option contracts, based on an average contract
price of $.74 per pound of primary aluminum, natural gas, fuel oil and
diesel fuel forward purchase and option contracts, and forward foreign
exchange contracts, was approximately $28.3.  Any gains or losses on the
derivative contracts utilized in the Company's hedging activities are
offset by losses or gains, respectively, on the transactions being hedged. 
However, see Note 5 regarding a recent accounting pronouncement.

ALUMINA AND ALUMINUM
     The Company's earnings are sensitive to changes in the prices of
alumina, primary aluminum and fabricated aluminum products, and also depend
to a significant degree upon the volume and mix of all products sold. 
Primary aluminum prices have historically been subject to significant
cyclical fluctuations.  Since 1993, the Average Midwest United States
transaction price for primary aluminum has ranged from approximately $.50
to $1.00 per pound. Alumina prices as well as fabricated aluminum product
prices (which vary considerably among products) are significantly
influenced by changes in the price of primary aluminum but generally lag
behind primary aluminum price changes by up to three months.

     From time to time in the ordinary course of business, the Company
enters into hedging transactions to provide price risk management in
respect of the net exposure of earnings resulting from (i) anticipated
sales of alumina, primary aluminum and fabricated aluminum products, less
(ii) expected purchases of certain items, such as aluminum scrap, rolling
ingot, and bauxite, whose prices fluctuate with the price of primary
aluminum.  Forward sales contracts are used by the Company to effectively
fix the price that the Company will receive for its shipments.  The Company
also uses option contracts (i) to establish a minimum price for its product
shipments, (ii) to establish a "collar" or range of prices for its
anticipated sales, and/or (iii) to permit the Company to realize possible
upside price movements.  As of June 30, 1998, the Company had sold forward,
at fixed prices, approximately 47,300 and 24,000 tons* of primary aluminum
with respect to 1998 and 1999, respectively.  As of June 30, 1998, the
Company had also purchased put options to establish a minimum price for
approximately 22,500 tons of primary aluminum with respect to 1998 and had
entered into option contracts that established a price range for an
additional 115,800, and 124,500 tons for 1998 and 1999, respectively. 
Additionally, at June 30, 1998, the Company also held fixed price purchase
contracts for 42,100 tons of primary aluminum with respect to 1998.

     As of June 30, 1998, the Company had sold forward virtually all of the
alumina available to it in excess of its projected internal smelting
requirements for 1998, 1999 and 2000 at prices indexed to future prices of
primary aluminum.

ENERGY
     The Company is exposed to energy price risk from fluctuating prices
for fuel oil and natural gas consumed in the production process. 
Accordingly, the Company from time to time in the ordinary course of
business enters into hedging transactions with major suppliers of energy
and energy related financial instruments.  As of June 30, 1998, the Company
had a combination of fixed price purchase and option contracts for the
purchase of approximately 45,000 MMBtu of natural gas per day during the
remainder of 1998.  As of June 30, 1998, the Company also held a
combination of fixed price purchase and option contracts for an average of
232,000 and 138,800 barrels per month of fuel oil and diesel fuel for 1998
and 1999, respectively.

----------------
*  All references to tons in this report refer to metric tons of 2,204.6
tons.

FOREIGN CURRENCY
     The Company enters into forward exchange contracts to hedge material
cash commitments to foreign subsidiaries or affiliates.  At June 30, 1998,
the Company had net forward foreign exchange contracts totaling
approximately $198.6 for the purchase of 285.6 Australian dollars from July
1998 through December 2000, in respect of its commitments for 1998 through
2000 expenditures denominated in Australian dollars.

     See Note 11 of the Notes to Consolidated Financial Statements for the
year ended December 31, 1997.

5.   RECENT ACCOUNTING PRONOUNCEMENTS

     Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS No. 130") was issued in June 1997 and was
adopted by the Company as of January 1, 1998.  SFAS No. 130 requires the
presentation of an additional income measure (termed "comprehensive
income"), which adjusts traditional net income for certain items that
previously were only reflected as direct charges to equity (such as minimum
pension liabilities).

     Statement of Financial Accounting Standard No. 133, Accounting for
Derivative Instruments and Hedging Activities ("SFAS No. 133") was issued
in June 1998 and requires companies to recognize all derivative instruments
as assets or liabilities in the balance sheet and to measure those
instruments at fair value.  SFAS No. 133 must be adopted by the Company no
later than January 1, 2000, although earlier application is permitted.  The
Company is currently evaluating how and when to implement SFAS No. 133.

     Currently, the dollar amount of the Company's comprehensive income
adjustments is not significant so there is not a significant difference
between "traditional" net income and comprehensive income for the quarters
and six-month periods ended June 30, 1998 and 1997.  However, differences
between comprehensive income and traditional net income may become
significant in future periods as a result of SFAS No. 133.  As discussed
more fully in Note 5, the intent of the Company's hedging program is to
"lock-in" a price (or range of prices) for products sold/used so that
earnings and cash flows are subject to reduced risk of volatility.  Under
SFAS No. 133, the Company will be required to "mark-to-market" its hedging
positions at each period end in advance of reflecting the physical
transaction to which the hedge relates.  Pursuant to SFAS No. 130, the
Company will reflect changes in the fair value of its open hedging
positions as an increase or reduction in stockholders' equity through
comprehensive income.  Under SFAS No. 130, the impact of the changes in
fair value of financial instruments will reverse out of comprehensive
income (net of any fluctuations in other "open" positions) and will be
reflected in traditional net income when the subsequent physical
transaction occurs.

     The combined result of SFAS No's. 130 and 133 will be that there will
be fluctuations in comprehensive income and stockholders' equity in periods
of price volatility, despite the fact that the Company's cash flow and
earnings will be "fixed" to the extent hedged.  The amount of such
fluctuations could be significant.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          ---------------------------------------------------------------
          RESULTS OF OPERATIONS
          ---------------------

     This section should be read in conjunction with the response to Item
1, Part I, of this Report.

     This section contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995.  These statements appear in a number of places in this section
(see, for example, "Recent Events and Developments," "Results of
Operations," and "Liquidity and Capital Resources").  Such statements can
be identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "estimates," "will," "should," "plans" or "anticipates"
or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy.  Readers are cautioned that any
such forward-looking statements are not guarantees of future performance
and involve significant risks and uncertainties, and that actual results
may vary materially from those in the forward-looking statements as a
result of various factors.  These factors include the effectiveness of
management's strategies and decisions, general economic and business
conditions, developments in technology, new or modified statutory or
regulatory requirements, and changing prices and market conditions.  This
section and the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, each identify other factors that could cause such
differences.  No assurance can be given that these are all of the factors
that could cause actual results to vary materially from the forward-looking
statements.

RECENT EVENTS AND DEVELOPMENTS

     The Company has previously disclosed that it set a goal of achieving
$120.0 million of pre-tax cost reductions and other profit improvements,
independent of metal price changes, with the full effect planned to be
realized in 1998 and beyond, measured against 1996 results.  Management
believes that recent operating performance has been at a rate which
indicates that its objective will be achieved during the second half of
1998.  However, there are inherent uncertainties regarding operating
factors and economic and other external forces (such as the Valco power and
domestic labor matters described below), many of which are outside
management's direct control, and, as such, no assurances can be given that
the desired benefit of profit improvements will be achieved.

     In addition to working to improve the performance of the Company's
existing assets, the Company has expended significant efforts on analyzing
its current asset portfolio with the intent of focusing its efforts and
capital in sectors of the industry that are considered most attractive. 
The initial steps of this process led to the formation of the AKW wheel
joint venture and the acquisition of the Bellwood aluminum extrusion plant
in Richmond, Virginia.  Additional portfolio analysis and initiatives are
ongoing.

     Substantially all of the Company's hourly workforce at the Gramercy,
Louisiana, alumina reduction facility, Mead and Tacoma, Washington,
aluminum smelters, Trentwood, Washington, rolling mill, and Newark, Ohio,
extrusion facility are covered by a master agreement ("the Labor Contract")
with the United Steelworkers of America which expires on September 30,
1998.  Negotiations concerning the Labor Contract are expected to commence
during the third quarter of 1998.

     During April 1998, the Company's 90%-owned Volta Aluminium Company
Limited ("Valco") smelter in Ghana reached an agreement with the Volta
River Authority ("VRA") to receive compensation in lieu of the power
necessary to run a potline that was curtailed on April 6, 1998.  The
compensation is expected to substantially mitigate the financial impact of
the curtailment.  Valco is now operating only one if its five potlines, as
compared to 1997, when Valco operated four potlines.  Valco had previously
curtailed two of its potlines in 1998, one in January, for which it
received no compensation, and one in February, for which it will be
compensated.  As previously announced, the Company has notified the VRA
that it believes it had the contractual rights at the beginning of 1998 to
sufficient energy to run four and one-half potlines for the balance of the
year.  Valco continues to seek compensation from the VRA with respect to
the January 1998 reduction of its power allocation.  Valco and the VRA also
are in continuing discussions concerning other matters, including steps
that might be taken to reduce the likelihood of power curtailments beyond
1998.  No assurances can be given as to the success of these discussions,
the possibility of requests from the VRA for additional curtailments, or as
to the operating level of Valco for the remainder of 1998 or beyond.

RESULTS OF OPERATIONS

     The table on the following page provides selected operational and
financial information on a consolidated basis with respect to the Company
for the quarter and six months ended June 30, 1998, and 1997.  As an
integrated aluminum producer, the Company uses a portion of its bauxite,
alumina and primary aluminum production for additional processing at
certain of its other facilities.  Intracompany shipments and sales are
excluded from the information set forth on the following page.

     Interim results are not necessarily indicative of those for a full
year.


               SELECTED OPERATIONAL AND FINANCIAL INFORMATION
                                (Unaudited)
           (In millions of dollars, except shipments and prices)

<TABLE>

<CAPTION>
                                                           Quarter Ended                 Six Months Ended
                                                             June 30,                        June 30,
                                                  ------------------------------  ------------------------------
                                                            1998            1997            1998            1997
                                                  ------------------------------  ------------------------------
<S>                                               <C>             <C>             <C>             <C>
Shipments: (1)
     Alumina                                              652.5           492.3         1,077.1           877.8 

     Aluminum products:
          Primary aluminum                                 68.3            82.0           148.8           160.5 
          Fabricated aluminum products                    107.8           100.4           213.3           194.3 
                                                  ------------------------------  ------------------------------
               Total aluminum products                    176.1           182.4           362.1           354.8 
                                                  ==============================  ==============================

Average realized sales price:
     Alumina (per ton)                            $         197   $         196   $         198   $         193 
     Primary aluminum (per pound)                           .70             .75             .71             .75 

Net sales:
     Bauxite and alumina:
          Alumina                                 $       128.3   $        96.5   $       213.8   $       169.7 
          Other (2) (3)                                    26.8            26.5            52.5            53.1 
                                                  ------------------------------  ------------------------------
               Total bauxite and alumina                  155.1           123.0           266.3           222.8 
                                                  ------------------------------  ------------------------------

     Aluminum processing:
          Primary aluminum                                105.8           135.3           232.0           264.5 
          Fabricated aluminum products                    353.0           334.5           709.9           648.9 
          Other (3)                                          .9             4.3             3.6             8.3 
                                                  ------------------------------  ------------------------------
               Total aluminum processing                  459.7           474.1           945.5           921.7 
                                                  ------------------------------  ------------------------------

                  Total net sales                 $       614.8   $       597.1   $     1,211.8   $     1,144.5 
                                                  ==============================  ==============================

Operating income (loss):
     Bauxite and alumina                          $        15.1   $         7.5   $        21.2   $         6.0 
     Aluminum processing (4)                               57.8            46.2           113.9            97.5 
     Corporate (5)                                        (17.5)          (18.1)          (34.7)          (35.1)
                                                  ------------------------------  ------------------------------
          Total operating income                  $        55.4   $        35.6   $       100.4   $        68.4 
                                                  ==============================  ==============================

Net income                                        $        17.4   $        14.6   $        29.8   $        18.9 
                                                  ==============================  ==============================

Capital expenditures                              $        23.0   $        47.0   $        36.7   $        68.8 
                                                  ==============================  ==============================

</TABLE>



---------------------------------------
(1)  In thousands of metric tons.
(2)  Includes net sales of bauxite.
(3)  Includes the portion of net sales attributable to minority interests
     in consolidated subsidiaries.
(4)  Includes a pre-tax charge of $15.1 related to restructuring of
     operations for both the quarter and six-month period ended June 30,
     1997.
(5)  Includes a pre-tax charge of $4.6 related to restructuring of
     operations for both the quarter and six-month period ended June 30,
     1997.

OVERVIEW
     The Company's operating results are sensitive to changes in prices of
alumina, primary aluminum, and fabricated aluminum products, and also
depend to a significant degree on the volume and mix of all products sold
and on the Company's hedging strategies.  Primary aluminum prices have
historically been subject to significant cyclical fluctuations. Alumina
prices as well as fabricated aluminum product prices (which vary
considerably among products) are significantly influenced by changes in the
price of primary aluminum but generally lag behind primary aluminum price
changes by up to three months.

     During 1997, the Average Midwest Transaction Price ("AMT Price") for
primary aluminum remained fairly stable generally in the $.75   $.80 range
through November and then declined during December to the $.70 - $.75
range.  After beginning 1998 at approximately $.73, the AMT Price for
primary aluminum declined to approximately $.69 at the end of March 1998
and further declined to approximately $.63 at the end of June 1998.  The
AMT Price for primary aluminum for the week ended July 24, 1998, was
approximately $.66 per pound.

     See Note 4 of the Notes to Interim Consolidated Financial Statements
for a discussion of the Company's hedging activities.

QUARTER AND SIX MONTHS ENDED JUNE 30, 1998, COMPARED TO QUARTER AND SIX
MONTHS ENDED JUNE 30, 1997

SUMMARY
     The Company reported net income of $17.4 million for the second
quarter of 1998, compared to a net income of $14.6 million for the same
period of 1997. Net sales in the second quarter of 1998 totaled $614.8
million compared to $597.1 million in the second quarter of 1997.

     For the six-month period ended June 30, 1998, net income was $29.8
million, compared to net income of $18.9 million, for the six-month period
ended June 30, 1997.  Net sales for the six months ended June 30, 1998,
were $1,211.8 million compared to $1,144.5 million for the first six months
of 1997.

     Results for the quarter and six-month periods ended June 30, 1997,
include the effect of certain nonrecurring items including a $19.7 million
restructuring charge and an offsetting $12.5 million non-cash tax benefit
related to settlement of certain matters.  Additionally, results for the
quarters and six-month periods ended June 30, 1998 and 1997, include
charges related to additional litigation reserves of $3.9 million and $5.8
million, respectively.

BAUXITE AND ALUMINA
     Net sales of alumina increased by 33% for the quarter ended June 30,
1998, from the comparable prior year period, as a result of a 33% increase
in alumina shipments, resulting from the timing of shipments as well
as reduced intracompany shipments to Valco.  For the six-month period ended
June 30, 1998, net sales of alumina increased by 26%, from the comparable
period in the prior year due to a 23% increase in shipments and a 3%
increase in average realized prices between periods.

     Operating income for the quarter and six-month period ended June 30,
1998, improved substantially over the comparable prior periods due
primarily to the price and volume factors discussed above, as well as
reduced energy prices.

ALUMINUM PROCESSING
     Net sales of primary aluminum for the quarter ended June 30, 1998,
decreased by 22% from the comparable prior year period as a 16% decrease in
shipments, primarily as a result of the aforementioned Valco potline
curtailments, as well as a 6% decrease in average realized prices.  Net
sales of fabricated aluminum products for the quarter ended June 30, 1998,
were up 6% as compared to the prior year period as a result of an 8%
increase in shipments offset by a 2% decrease in average realized prices. 
The increase in fabricated aluminum product shipments over the second
quarter of 1997 was the result of the Company's June 1997 acquisition of
the Bellwood extrusion facility and increased shipments of heat-treat
products from the Company's Trentwood, Washington, rolling mill, offset by
reduced volumes in the Company's Engineered Products business unit, in part
due to the formation of the AKW wheel manufacturing joint venture.

     For the six-month period ended June 30, 1998, net sales for the
aluminum processing segment increased by approximately 3% as a 9% increase
in net sales of fabricated aluminum products more than offset a 12% decline
in net sales of primary aluminum.  The increase in fabricated aluminum
product net sales, and offsetting decrease in primary aluminum net sales,
resulted from the same shipment and price factors discussed in the
preceding paragraph.

     Despite a significant decline in the average realized price for
primary aluminum, segment operating income for the quarter and six-month
period ended June 30, 1998, was essentially flat as compared to the
comparable prior year period, after adjusting 1997 results for the impact
of the non-recurring items discussed below.  The ability to sustain the
segment's operating earnings reflects the continued demand for heat-treat
products, improvements in operating performance, particularly at the
Company's Trentwood, Washington, rolling mill, as well as compensation
recorded by the Company (which will be received over a 18-month period
beginning in July 1998) for two of the three Valco potlines curtailed
during 1998.  Reduced power and raw material costs in the primary aluminum
operations also contributed to the Company's ability to maintain the prior
year earnings level.

     Operating income for the quarter and six-month period ended June 30,
1997, included approximately $2.3 million and $5.2 million, respectively,
of operating income related to the settlement of certain issues related to
energy service contracts.  Operating income for the quarter and six-month
period ended June 30, 1997, also includes a $15.1 million charge resulting
from the previously discussed restructuring of operations.

CORPORATE
     Corporate operating expenses represent corporate general and
administrative expenses, which are not allocated to the Company's business
segments.  Operating results for the quarter and six-month period ended
June 30, 1997, both include a pre-tax charge of approximately $4.6 million
associated with the Company's restructuring of operations.

LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES
     At June 30, 1998, the Company had working capital of $500.4 million,
compared with working capital of $456.6 million at December 31, 1997.  The
increase in working capital primarily results from increases in Cash and
cash equivalents and Prepaid and other current assets and a decrease in
Accounts payable, offset, in part, by decreases in Receivables and
Inventories.

INVESTING ACTIVITIES
     Capital expenditures during the six months ended June 30, 1998, were
$36.7 million and were used primarily to improve production efficiency,
reduce operating costs, expand capacity at existing facilities, and
construct new facilities.  Total consolidated capital expenditures (of
which approximately 8% is expected to be funded by the Company's minority
partners in certain foreign joint ventures) are expected to be between
$75.0 and $125.0 million per annum in each of 1998 through 2000.

     During the first quarter of 1998, the first Micromill(TM) facility,
which was constructed in Nevada during 1996 as a demonstration and
production facility, delivered its first commercial product shipments to
customers, but the amount of such shipments was minimal.  Additional
product trials for international and domestic customers are ongoing.
However, the Micromill(TM) technology has not yet been fully implemented or
commercialized, and there can be no assurances that full implementation or
commercialization will be successful.

     Management continues to evaluate numerous projects, including the
Micromill(TM) technology, all of which would require substantial capital,
both in the United States and overseas.

FINANCING ACTIVITIES AND LIQUIDITY

     At June 30, 1998, the Company had long-term debt of $964.5 million,
compared with $971.7 million at December 31, 1997.

     At June 30, 1998, $271.3 million (of which $71.3 million could have
been used for letters of credit) was available to the Company under the
Credit Agreement and no amounts were outstanding under the revolving credit
facility.  Loans under the Credit Agreement bear interest at a spread
(which varies based on the results of a financial test) over either a base
rate or LIBOR at the Company's option.  During the six-month period ended
June 30, 1998, the average per annum interest rates on loans outstanding
under the Credit Agreement was approximately 9%.  The Credit Agreement does
not permit the Company or Kaiser to pay any dividends on their common
stock.

     Management believes that the Company's existing cash resources,
together with cash flows from operations and borrowings under the Credit
Agreement, will be sufficient to meet its working capital and capital
expenditure requirements for the next year.  Additionally, with respect to
long-term liquidity, management believes that operating cash flow, together
with the ability to obtain both short and long-term financing, should
provide sufficient funds to meet the Company's working capital and capital
expenditure requirements.

                        PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS
          -----------------

Asbestos-related Litigation

     The Company is a defendant in a number of lawsuits, some of which
involve claims of multiple persons, in which the plaintiffs allege that
certain of their injuries were caused by, among other things, exposure to
asbestos during, and as a result of, their employment or association with
the Company or exposure to products containing asbestos produced or sold by
the Company.  The portion of Note 3 of the Notes to Interim Consolidated
Financial Statements contained in this report under the heading "Asbestos
Contingencies" is incorporated herein by reference.  See Part I, Item 3.
"LEGAL PROCEEDINGS - Asbestos-related Litigation" in the Company's Form 10-
K for the year ended December 31, 1997.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          ---------------------------------------------------

     The annual meeting of stockholders of the Company was held on June 4,
1998, at which meeting the stockholders voted to elect management's slate
of nominees as directors of the Company.  The nominees for election as
directors of the Company are listed below, together with the number of
votes cast for, against, and with held with respect to each such nominees,
as well as the number of abstentions and broker nonvotes with respect to
each such nominee:

Robert J. Cruikshank
     Votes For:                              46,566,749
     Votes Against:      
     Votes Withheld:                            123,099
     Abstentions:
     Broker Nonvotes:

George T. Haymaker, Jr.
     Votes For:                              46,564,656
     Votes Against:
     Votes Withheld:                            125,192
     Abstentions:
     Broker Nonvotes:

Charles E. Hurwitz
     Votes For:                              46,541,723
     Votes Against:
     Votes Withheld:                            148,125
     Abstentions:
     Broker Nonvotes:

Ezra G. Levin
     Votes For:                              46,568,263
     Votes Against:
     Votes Withheld:                            121,585
     Abstentions:
     Broker Nonvotes:

Robert Marcus
     Votes For:                              46,566,426
     Votes Against:
     Votes Withheld:                            123,422
     Abstentions:
     Broker Nonvotes:

Robert J. Petris
     Votes For:                              46,491,933
     Votes Against:
     Votes Withheld:                            197,915
     Abstentions:
     Broker Nonvotes:

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          --------------------------------

     (a)  Exhibits.

     Exhibit No.    Exhibit
     -----------    -------

      3.1 Restated Certificate of Incorporation of Kaiser Aluminum &
          Chemical Corporation (the "Company" or "KACC"), dated July 25,
          1989 (incorporated by reference to Exhibit 3.1 to the
          Registration Statement on Form S-1, dated August 25, 1989, filed
          by KACC, Registration No. 33-30645).

      3.2 Certificate of Retirement of KACC, dated February 7, 1990
          (incorporated by reference to Exhibit 3.2 to the Report on Form
          10-K for the period ended December 31, 1989, filed by KACC, File
          No. 1-3605).

      3.3 Amended and Restated Bylaws of KACC, dated October 1, 1997.

     *4   Thirteenth Amendment to Credit Agreement, dated as of July 20,
          1998, amending the Credit Agreement, dated as of February 15,
          1994, as amended, among Kaiser Aluminum Corporation, KACC, the
          financial institutions party thereto, and BankAmerica Business
          Credit, Inc., as Agent.

     *10  Letter Agreement, dated July 21, 1998, between the Company and
          Lawrence L. Watts concerning employment and severance matters.

     *27  Financial Data Schedule.

     (b)  Reports on Form 8-K.

     No Report on Form 8-K was filed by the Company during the quarter
ended June 30, 1998.



---------------
*    Filed herewith

                                 SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized, who have signed this report on
behalf of the registrant as the principal financial officer and principal
accounting officer of the registrant, respectively.

                                        KAISER ALUMINUM & CHEMICAL
                                        CORPORATION


                                             /s/   John T. La Duc
                                        By: ------------------------------
                                                   John T. La Duc
                                                Vice President and 
                                              Chief Financial Officer
                                           (Principal Financial Officer)


                                             /s/  Daniel D. Maddox
                                        By: ------------------------------
                                                  Daniel D. Maddox
                                               Controller - Corporate
                                            Consolidation and Reporting
                                           (Principal Accounting Officer)



Dated:    July 31, 1998<PAGE>