Less than a year after the coal industry was declared to be in terminal decline, the fossil fuel has staged its steepest price rally in over half a decade, making it one of the hottest major commodities.

Cargo prices for Australian thermal coal from its Newcastle terminal, seen as the Asian benchmark, have soared over 35 per cent since mid-June to more than one-year highs of almost $US70 a tonne, pushed by surprise increases in Chinese imports.

Prices for Australian thermal coa have soared over 35 per cent since mid-June, thanks to a surprise rise in Chinese imports. Credit:Robert Rough

"Coal markets, after five years of declining prices, appear to have found a bottom in the first quarter," Sydney-based Whitehaven Coal said on Thursday, as its shares hit a three-year high on the release of its annual results.

"Reasons for the increase in prices include mine closures in Indonesia, United States and Australia and policy change by Chinese authorities," Whitehaven said, adding it was confident that coal prices will rise.