Massey Energy boosting steel-making coal output

* Boosting production of metallurgical coal

* Sees exporting more to customers in Asia

* Thermal coal demand is still weak

* Stock ends 1.19 percent higher

NEW YORK, Feb 3 (Reuters) - Massey Energy MEE.N is increasing its production and export of metallurgical coal because of rising demand from global steelmakers, the coal miner's chief executive said on Wednesday.

"We are placing an ever-increasing focus on Asian markets." Don Blankenship told Wall Street analysts.

"We have identified several potential customers in Asia and we are hopeful of signing contracts for the sale of met coal directly to Chinese companies," he said on a conference call.

He said Chinese and Indian economies were growing on the back of coal-fired steel production, among other factors. Metallurgical, or coking coal, is used to fuel blast furnaces in which steel is made.

"We are actively adapting our business strategy and our operations to optimize our opportunities to compete in growing world markets," Blankenship said.

In addition to direct Asian sales, Massey was likely to sell more metallurgical coal into the Atlantic basin.

"The demand for steel in Brazil is increasing and new steel mills are under construction to meet the current and future demands driving increasing met coal demand."

While U.S. steel production remains below the recent average, it has rebounded from the lows of January 2009.

"For all these reasons, we have increased our metallurgical coal sales outlook to a range of 10 to 12 million tons in 2010 and we have begun expanding our metallurgical coal production," Blankenship said. The company's previous estimate was for 8 million to 10 million tons of coking coal.

Massey produced 38 million tons of coal last year -- most of it thermal, or steam coal, used in power generation.

Blankenship said the company's 12 million tons of metallurgical coal production capacity was expected to rise to about 15 million tons by the end of 2012.

In contrast, he said thermal coal demand is still weak, although cold weather in the United States this winter drove down utility stockpiles.

"However, we believe further reductions in production and utility stockpiles will be required to achieve a sustainable supply-demand balance.

"We continue to believe domestic thermal coal demand will remain soft for the next several quarters," said Blankenship.

"I would say the first quarter and the fourth quarter (this year) will be the two weakest quarters and the second and third will be the two stronger quarters."

Shares in Massey, whose fourth-quarter earnings beat Wall Street estimates on Tuesday, rose 50 cents, or 1.19 percent, to close at $42.60 on the New York Stock Exchange on Wednesday.

(Reporting by Steve James; Editing by Bernard Orr)