Dalian coking coal futures surge over 5% on supply crunch

BEIJING: Chinese coking coal futures jumped more than 5% on Wednesday, extending gains to a second straight session on supply concerns as safety inspection by authorities halted production at some mines.

The most-traded coking coal futures contract on the Dalian Commodity Exchange, for September delivery, rose 5.4% to 2,044 yuan ($315.43) per tonne as of 0330 GMT.

"Due to government probes after a raft of mine accidents recently, some mills are facing supply shortages for the material," said Zhuo Guiqiu, an analyst with Jinrui Futures, adding that coking coal imports have not improved as well.

Coking coal futures prices are also at a discount to spot prices, which are at about 2,200 yuan per tonne, Zhuo said.

Tracking the jump in coal futures, coke prices surged 5.4% to 2,779 yuan.

Benchmark iron ore futures on the Dalian bourse rebounded after three straight sessions of losses, rising 4.2% to 1,175 yuan per tonne.

Steel prices on the Shanghai Futures Exchange also gained despite the steel association warning on Tuesday that the sector was facing weak seasonal demand.

Construction rebar, for October delivery, rose 2.1% to 4,967 yuan a tonne. Hot-rolled coils, used in cars and home appliances, increased 1.9% to 5,215 yuan per tonne.

The August contract for Shanghai stainless steel futures was up 2.1% at 16,435 yuan a tonne.

China's state planner said on Wednesday that it and the market regulator have recently sent teams to various areas to look into commodities prices and supplies and would learn about mid- and downstream companies' situations.