JP Morgan: Price of coking coal cut in half

Vancouver – It’s that time of the year again – the time when companies settle coal contracts.

And unlike last year’s brisk business marked by steep coal prices, with this year’s lower demand for steel products and electricity it is very much a buyer’s market.

In an email JP Morgan’s coal analyst John Bridges says some Japanese companies have already settled at US$129 per tonne coking coal.

“This is down 57% from last year’s US$300/t,” he writes.

He says JP Morgan sees the US$129-per-tonne coal price as the guiding rate for coking coal in 2009.

For thermal coal he says prices are settling around US$70 per tonne. That, he writes, “compares with US$125/t for the last Japanese financial year.”

The kicker for coal exploration companies?

“Yes, discovering coal this year would struggle to get Bay Street excited,” Bridges writes.