* Q1 EPS C$0.08 vs C$0.02 year ago
* Revenue up 169 pct, stronger contract pricing helps
* Coal sales 1.3 mln tons vs 435,000 tons year ago
* Shares drop as much as 4 pct (Recasts; adds details, updates share movement)
Aug 4 (Reuters) - Western Coal Corp WTN.TO WTN.L reported a six-fold growth in first-quarter profit, but expects weaker demand from steelmakers to hurt metallurgical coal sales in the third quarter, sending its shares down as much as 4 percent.
The company said steel prices fell in June in China, the United States and other regions, largely due to overproduction and completion of steel restocking.
China has emerged as top-sought destination for North American coal producers since last October, when its thermal and coking coal imports began to surge. Chinese coking coal import volumes have remained strong during the first half of 2010, although analysts say the demand continues to remain volatile.
Western Coal said the pulverized coal injection (PCI) market was more exposed to the softening in demand, while the market fundamentals for hard coking coal were expected to remain tight throughout the quarter.
The company, however, said steel production was expected to rebound during the fourth quarter, particularly in Asia, and would strengthen metallurgical coal demand towards the end of the fiscal year.
For the first quarter ended June 30, the company earned C$20.2 million, or 8 Canadian cents a share, compared with C$3.4 million, or 2 Canadian cents a share, a year ago.
Excluding items, it earned 15 Canadian cents a share.
Revenue more than doubled to C$203.5 million, as benchmark hard coking prices were $200 per ton, up from $126 per ton, a year ago.
Western Coal's coal sales nearly tripled to 1.3 million tons.
Shares of the Vancouver-based company, which intends to move to the London Stock Exchange's main market before the end of December, were down 13 Canadian cents at C$4.16 Wednesday afternoon on the Toronto Stock Exchange. They touched a low of C$4.11 earlier in the session. (Reporting by Ashutosh Joshi in Bangalore; Editing by Don Sebastian, Aradhana Aravindan)