MICHAEL FELBERBAUM

RICHMOND, Va. (AP) â¿¿ Coal producer Alpha Natural Resources Inc. is expected to post lower profit but higher revenue when it releases its third-quarter results before the stock market opens on Thursday.

WHAT TO WATCH FOR: How global demand has impacted U.S. coal prices and the health of the industry.

The Abingdon, Va., company said in late September that it will ship less coal this year than previously estimated because of an unexpected drop in demand from Asia and production shortfalls at some U.S. mines.

It said shipments to Asia of metallurgical coal, which is used in steel-making, are falling because of "unexpectedly curtailed customer activity levels." Overall shipments of metallurgical coal from Alpha's eastern mines are going to be 500,000 tons below previous expectations.

Alpha expects to ship between 102.5 million and 109.5 million tons this year, down from a previous estimate of between 104 million and 112 million tons.

Because of lower-than-expected shipments, the company said expenses would rise.

The company's outlook is in contrast to rival Consol Energy Inc.'s assessment at the time, in which it saw higher shipments to Asia and expected overall export markets to remain strong for the rest of the year. And analysts said Alpha's outlook was more about whether steelmakers were opting to buy more higher-quality metallurgical coal.

Analysts will be looking for revised 2012 financial and operations forecasts, which the company said it would provide during the third quarter. They also will be listening for what the company has to say about tougher regulatory scrutiny in recent years.

Coal producers Arch Coal Inc. and Consol both said they were able to cash in on higher selling prices for coal in the third quarter. Consol said demand for coal used in steel-making has been buoyed by demand in China and other developing countries.

Last quarter, the company lost money after booking charges related to its acquisition of rival Massey Energy and expenses from the deadly explosion at Massey's Upper Big Branch mine in West Virginia. It had posted profits in the previous three quarters. However the addition of Massey operations helped increase revenue by 59 percent.

Alpha said the cost of coal sales are being impacted by increases in the per ton cost of purchased coal, higher diesel fuel costs and general inflationary pressures.

WHY IT MATTERS: Alpha's $7.1 billion takeover of Richmond, Va.-based Massey in June made it the world's third-largest producer of metallurgical coal, a key fuel for manufacturing steel. It also supplies thermal coal to electric utilities and manufacturing industries.

Alpha has 5 billion tons of coal reserves and more than 180 mines and processing plants in Kentucky, Pennsylvania, Virginia, West Virginia and Wyoming.

Analysts look to coal producers to help gauge the strength of the manufacturing economy.

WHAT'S EXPECTED: Analysts expect earnings of 10 cents per share on revenue of $2.07 billion, according to FactSet.

LAST YEAR'S QUARTER: Alpha said adjusted earnings were 58 cents per share on revenue of $1 billion in the year-ago period.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .

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