October 24, 2018 / 2:41 AM / 21 days ago

China Dalian coke rises on tight supply concerns

BEIJING (Reuters) - The Dalian price of steelmaking raw ingredient coke rose on Wednesday, marking it strongest day in nearly two weeks, on worries over tight supply amid anti-pollution measures in northwestern China.

Linfen city in the coal-mining hub of Shanxi province may enforce production restrictions for heavy industry, including coke, steel, coal-fired power, casting, chemicals and building materials sectors, from mid-November until mid-March next year, the state-backed China Environment News reported.

Industrial plants that fail to meet certain emission standards will be ordered to halve their production or even shut.

Linfen’s policy would reduce daily coke output by around 5,200 tonnes, said analysts from Huatai futures in a note, citing an estimate by consultancy Mysteel.

The most-active coke futures on the Dalian Commodity Exchange closed 2.6 percent higher at 2,435 yuan ($350.96) a tonne, setting their best performance since Oct. 12.

Some coke producers hiked physical prices by 50-100 yuan a tonne in northern China this week, which has also helped drive up futures prices.

Dalian coking coal rose 1.1 percent to 1,395 yuan a tonne, after a coal mining accident in eastern Shandong province on Monday killed three people and led to the temporary closure of 41 mines.

The benchmark steel rebar contract on the Shanghai Futures Exchange gained 0.9 percent to 4,190 yuan a tonne. Trading volumes in the previous session fell to a two-week low, as investors adopted a cautious stance ahead of more information about winter production curbs across the country.

China allowed local governments to set their own winter production restrictions this year, ditching last year’s blanket limits.

Anhui province in China’s manufacturing hub Yangtze River Delta said on the provincial government’s website that it would introduce anti-smog measures during the winter season as part of efforts to improve air quality, but did not give details for individual producers.

The most-traded iron ore contract for January delivery on the Dalian exchange settled 2.7 percent higher at 536.5 yuan amid declining iron ore shipment data from overseas miners.

A total of 20 million tonnes of iron ore was brought in to China last week as of Oct.21, falling by 3.32 million tonnes from prior week, according to data compiled by Mysteel Consultancy.

Reporting by Muyu Xu and Dominique Patton; editing by Richard Pullin and Vyas Mohan

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