PREVIEW-Met coal shipments seen vital to Patriot Coal's Q3

* What: Patriot Coal Q3 results

* When: Oct. 27

* Poor thermal coal market to weigh on Q3

* Met coal shipment volumes may swing the results

By Antonita Madonna Devotta

BANGALORE, Oct 26 (Reuters) - Patriot Coal Corp (PCX.N) 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 ton-per-annum mine in Central Appalachia in August to balance its production levels with soft thermal coal demand. [ID:nBNG498216]

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

Analysts, on average, expect the company to post a loss of 47 cents a share, according to Thomson Reuters I/B/E/S.

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.

U.S. 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.

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

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 $180 to $200 per ton in September and October from about $110 per ton in July.

September saw a huge improvement in the metallurgical coal market, allowing many coal companies to cash in on the opportunity to ramp up their quarterly performance, Bandy said.

Analysts believe met coal shipments volumes hold the key to Patriot's third quarter, as the tons shipped significantly influence its results.