* Xstrata, Chugoku term deal sets tone, floor in Pacific
* July, August Newcastle prices start to rise
By Rebekah Kebede and Jackie Cowhig
PERTH/LONDON, April 1 (Reuters) - Record thermal coal term contract prices agreed by Japanese utilities and one Australian supplier this week have given the nearby global coal values a boost, utilities, traders and analysts said on Friday.
Xstrata XTA.L and Chugoku Electric (9504.T) have agreed annual contract prices for the fiscal year starting April 1 at just under $130 a tonne FOB Newcastle, over 30 percent higher than last year [ID:nL3E7EV499].
May loading physical Newcastle cargo prices rose by $1.00 in early trading on the settlement news to $125-$127 a tonne but fell back slightly on bank selling to $125 by 1000 GMT.
"The Japanese have clearly been convinced by the Australians that the market going up is a certainty," said Emmanuel Fages, analyst with Paris-based Societe Generale.
"The settlement news is bullish, very bullish," said one major international trader.
The Pacific coal market is still heavily influenced by the level at which term prices are settled, unlike the Atlantic market where most end-user buying is on floating indices.
"The Japanese did not have to pay $140. Others will now as this rather sets the tone and probably a floor," he added.
The settlement price is nearly $10 above the current globalCOAL index for Australia's Newcastle coal, the benchmark for Asian prices, which closed at $120.84 for the week to date on Thursday.
Analysts said prices have been temporarily depressed by the Japan quake and will recover as Japan's coal-fired come back online and ramp up to compensate for lost nuclear power.
"Once we get over the Japan situation, I'm expecting spot prices to lift as the trade re-tightens," Tom Price, an analyst with UBS said, adding that prices will likely return to the $130 per tonne level, where they were before the quake.
"Our expectation of a $20 tonne correction in 12 months time reflects a forecast lift in supply across the seaborne market, and in the massive coal industry of China to which it is linked, in response to these relatively high and stable price levels," Price said.
While very prompt prices may start to sag again following the initial reaction to the settlement news, it has also started to boost prices for July and August, traders said.
"We're now starting to see some people coming out to buy physical for July and August loading and prices are strengthening - this is the point at which Japan is expected to start needing more coal," another trader said.
Others were not so convinced of the market's medium-term strength or that Japan's utilities will recover so soon.
"Coal consumption is going to be down because of the power plants that have been knocked out by the quake and the tsunami, it's going to take a lot longer to put them back online than people are predicting," one Sydney-based trade source said. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Factbox on Japan quake impact on energy [ID:nL3E7EE2EU]
TAKE A LOOK on Japan quake impact [ID:nLDE72A217]
SPECIAL REPORT How Japan lost calculated nuclear risk [ID:nL3E7ET20P] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reporting by Rebekah Kebede and Jackie Cowhig, editing by William Hardy