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BAD weather has again interrupted coal shipments out of Newcastle, with heavy seas and strong winds restricting the movement of ships in the harbour yesterday.

Fears of a repeat of last week's devastating storms were allayed as earlier storm warnings were downgraded, but the weather bureau was still predicting severe weather on the NSW north coast last night.

Flooding in the Hunter Valley last week caused parts of the railway network to be washed away, forcing coal producers including BHP Billiton, Xstrata and Coal & Allied to declare force majeure on some coal shipments.

Force majeure is a clause that frees a company from its contractual obligations due to an extraordinary event beyond its control.

The interruptions have pushed the price of thermal coal sold out of Newcastle to $66.25 a tonne, according to globalCOAL, up from $56.35 in late May.

The Hunter Valley Coal Chain Logistics Team, which is responsible for planning coal exports from the Hunter Valley, said yesterday it expected capacity to be restored to about 80 per cent this week, but deliveries are still being hampered by the weather.

``The main impediment to reaching full capacity will be the need to operate trains at reduced speed for several days while waiting for water to drain,'' HVCCLT general manager Anthony Pitt said.

HVCCLT has estimated that the storms and flooding will see at least 2.5 million tonnes of coal shipments lost.

Shipments out of Newcastle Port were already been hampered by capacity constraints as miners ramped up production to meet demand from China.

The Port of Newcastle has not updated its weekly operations report since June 4, when there were 56 ships waiting off the NSW coast to load coal.

Port Waratah Coal Services, which operates two terminals at Newcastle, yesterday flagged plans to expand its facilities, boosting export capacity from 102 million tonnes a year to 113 million tonnes.

The expansion would cost about $458 million and is scheduled for start-up in late 2009.

PWCS is already spending $78 million to expand its Kooragang Coal Terminal.

The rival Newcastle Coal Infrastructure Group, which includes BHP Billiton and other producers, is also building a new terminal at Newcastle at a cost of $922 million.