JP Morgan Bearish On Coal

It’s that time of the year again — 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 per cent from last year’s US$300 per tonne,” he writes.

Bridges 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 says, “compares with US$125 per tonne for the last Japanese financial year.”

The kicker for coal exploration companies? “Discovering coal this year would struggle to get Bay Street excited,” Bridges writes.