(Adds lower sales forecast for met coal, executive's comments on conference call, share price move)
July 30 (Reuters) - Arch Coal Inc reported a bigger quarterly loss before special items on Tuesday on a drop in metallurgical coal prices and cut its sales forecast for the steelmaking ingredient, sending its shares down 3 percent.
The St. Louis, Missouri-based miner said it now expects to ship 7.7 million to 8.3 million tons of steelmaking coal in 2013, down from an earlier forecast of 8 million to 9 million tons.
"There still is excess supply in the market," Chief Operating Officer Paul Lang told a conference call. "It's a tough number to gauge, but we believe it's somewhere between 15 to 25 million tons on a worldwide basis."
Although the quarterly loss was wider than a year earlier, it still beat analysts' estimates, and the company noted an uptick in the domestic market for thermal coal, which is used to generate electricity.
Arch expects U.S. thermal coal consumption to increase through 2013, with demand outpacing supply, helping to reduce power plant stockpiles.
Still, prices for both types of coal remain depressed. In light of that weakness, Arch has focused on reducing costs, and reported a 17 percent decline in cash costs in the second quarter.
Arch also reduced its cash cost forecast for all operating regions, and said it plans to cut capital spending for the year by about $20 million.
"Our cost-reduction initiatives are generating results, and we will continue to pursue aggressive cost reductions across all of our operations during the second half of the year," Chief Executive John Eaves said in a statement.
Arch said it continues to expect a rebalancing in the metallurgical coal market, noting the relative strength of demand for high-quality coal in Europe and a projected increase in steel production as global economies begin to grow.
The miner, which is looking to divest noncore assets and build up its metallurgical coal business, reached a deal in June to sell its thermal coal mines in Utah to privately held Bowie Resources for $435 million.
Arch reported an adjusted loss of $60.5 million, or 29 cents a share, for the second quarter, compared with a loss of $22.1 million, or 10 cents a share, a year earlier. That beat the average analyst forecast of a loss of 33 cents a share, according to Thomson Reuters I/B/E/S.
Including one-time items such as impairment charges, Arch's net loss was 34 cents a share, compared with a net loss of $2.05 a year earlier, when the company idled five coal mines and recorded a $526 million charge.
Revenue from continuing operations fell 21 percent to $766.3 million on the weaker market for metallurgical coal.
Average cash costs in the quarter were $18.57 a ton, down from $22.42 in the year-before period. Its average sales price fell 21 percent to $22.34 a ton.
Arch mines a mix of metallurgical and thermal coal in the Appalachia, the Powder River Basin, Illinois and Colorado. Both commodities have been under pressure in recent quarters, and Arch's stock slumped to a 10-year low in June. Shares were down 3.2 percent at $3.99 around midday on Tuesday. (Reporting by Julie Gordon and Allison Martell in Toronto; Editing by Gerald E. McCormick, John Wallace and Peter Galloway)