Earnings Preview: Arch Coal 3Q Report

JIM SUHR

ST. LOUIS (AP) — Arch Coal Inc., one of the world's biggest coal producers, reports earnings for the third quarter before the market opens Friday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Shares of major coal mining companies have been under pressure in recent months as investors worry about the slumping steel industry and the recession's effect on some 2010 contract negotiations.

Starting with St. Louis-based Peabody Energy's earnings release last week, analysts have been closely watching the third-quarter performances of coal-mining interests as a gauge of the strength of the rebounding manufacturing economy. Observers specifically were keeping an eye on sales of metallurgical coal used to make coke, a key ingredient in steelmaking.

Though metallurgical coal is produced in smaller quantities than steam coal for utilities, it sells for more than double the price, often boosting profits.

Peabody and Tampa, Fla.-based Walter Energy last week reported stronger-than-expected profits for the third quarter, in large part due to metallurgical coal demand.