Brokerage Citigroup said the Newcastle spot price had leapt $US8 per tonne to $50/t in just two weeks with Asian thermal prices, including seaborne and Chinese domestic, receiving strong support from a supply shortage in China.

China's combined hike in imports and drop in exports has created a short-term supply crisis in Asia.

In a short period, disasters – resulting in shutdowns – have hit mines in China’s coal-rich provinces of Shanxi and Hunan with up to 100 workers killed in Taiyuan, Datong, Linshi and Leiyang.

Adding to the shortage, Citigroup reported, were emerging industry reports that China's major exporters, including Shanxi Coal, China Coal and Shenhua, were struggling to make deliveries.

The brokerage predicted that while China's demand growth, winter restocking, hydropower shortfalls and declining exports are all factored into its current contract thermal price forecast of $US50/t for the Japanese financial year (JFY) 2007-08, the impact of the mine supply shock is not.

“We now highlight upside risk to this forecast, but expect China's local coal supply to recover in early 2007.”