Key contracts of coal for electricity generation for delivery in 2008 have been signed and major prices increased by 30-40 yuan ($4.06-5.42) per ton, up around 10 percent year on year, according to China Coal Transport and Distribution Association, Shanghai Securities News reported.

The volume of key coal supply contracts reached 888 million tons as of 5:30 pm yesterday, including 628 million tons of coal for electricity generation.

The hike will drive up electricity prices in tandem, but the National Development and Reform Commission is reluctant to mention electricity price hikes due to concerns on exacerbating inflation.

Insiders attribute the price hikes to tighter coal supply, global crude oil price rises and costs.

Electricity firms often propose an electricity price increase when price of coal for electricity generation rises to pass the increased costs onto their consumers.

According to securities analysts, listed coal firms will have better financial results in 2008 because of the key contract price hike. The power industry may face larger cost pressures because it is still unknown whether the government will peg electricity prices to coal prices.