Reuters reported that Patriot Coal Corporation has been mired in a weak thermal coal market and regulatory issues, but analysts believe the steelmaking coal segment holds the key to the miner's third quarter performance.

Coal miners have cut production, idled plants and trimmed jobs as coal's status as the dominant fuel in the United States to generate electric power came under threat from falling industrial electricity demand and an abundance of cheap natural gas.

Patriot, primarily a producer of thermal coal, had closed a 2.5 million tonnes per annum mine in Central Appalachia in August to balance its production levels with soft thermal coal demand.

Mr Shneur Gershuni analyst of UBS Securities said that "We are clearly not expecting this to be a blowout quarter for the company."

Patriot also has a significant exposure to surface mining in the Appalachian region, where mining permits are being held up by the Environment Protection Agency.

US coal companies operating in the Appalachians face regulatory hurdles as new environment friendly policies, like the delay in issuing mining permits and the climate bill pending in the Congress, threaten jobs and raise costs for the cash strapped miners.

Mr Meredith Bandy analyst of BMO Capital Markets said that "Definitely the thermal market is very challenging in the Appalachians, so without an improvement in metallurgical coal, Patriot would have significant difficulties."

The ongoing recovery in global steel demand has boosted met coal markets and many analysts have raised their price outlooks for coking coal 2010 price forecasts have gone up to USD 180 to USD 200 per tonnes in September and October from about USD 110 per tonne in July.

(Sourced from www.reuters.com)