February 2, 2012 / 11:30 AM / 8 years ago

UPDATE 4-Patriot Coal idles one more mine as demand dips

* Sees 2012 sales volumes down at 27-29 mln tons

* Says idled Big Mountain complex in Boone County

* Patriot Q4 loss $0.42/ shr vs EPS $0.08 a year ago

* Mine idling a positive - Analysts

* Shares up 13 pct

By Swetha Gopinath

Feb 2 (Reuters) - Patriot Coal Corp, which has cut back on production of steel-making coal due to a weak export market, will now idle a thermal coal complex as its power-producing customers switch to cheaper natural gas.

The company’s shares, which had lost 73 percent of their value in the last one year till Wednesday, rose as much as 13 percent to $8.75 on Thursday on the New York Stock Exchange.

“The stock is up on the production cuts,” CRT Capital Group analyst Kuni Chen said.

“It bodes well for the coal space that producers are being disciplined and taking out higher-cost capacity at a time when demand is weak.”

Power producers such as FirstEnergy Corp, American Electric Power and Duke Energy are shutting down many of their coal-fired plants in response to stricter environmental rules.

Clean-burning natural gas, whose prices had recently plunged to their cheapest relative to coal since 2009, is fast emerging as a replacement to coal for power generation.

“Headwinds created by low natural gas prices, mild weather, and weaker international and domestic economies impacted coal markets during the year, and market weakness continues as we enter 2012,” Chief Executive Richard Whiting said in a statement.

Thermal coal on the globalCOAL Newcastle index for the week to date closed at $118.47 per tonne on Wednesday, down from $121.68 a week earlier.

St Louis, Missouri-based Patriot Coal said it will idle its Big Mountain complex in Boone County, West Virginia, which had produced 1.8 million tons of its total thermal coal output last year.

“All the coal they are mining this year, they have already sold. They only have some coking (met) coal left to sell. If the outlook improves, as we expect, they will sell that too,” Iberia Capital Partners analyst David Beard said by phone.

On a call with analysts, Chief Financial officer Mark Showedder said the company’s met-coal inventory levels will normalize later in the year after rising in the first quarter.

Last month, the company halted met-coal production at two units and three contractor-operated mines in Southern West Virginia.

CEO Whiting said several of these idled units could be back in production sometime this year.

Peabody Energy spin-off Patriot Coal posted its fourth straight quarterly loss on Thursday, hurt by weak domestic and export demand, and forecast lower sales volumes for this year.

For 2012, the company forecast sales volume of 27 to 29 million tons, including met coal sales of 7.0 to 7.8 million tons. Total sales volume were 31.1 million tons and met coal sales were 7.4 million tons last year.

Patriot Coal posted a net loss of 42 cents per share, compared with a profit of 8 cents per share. Revenue rose 14.3 percent to $603.9 million.

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