* Steel, iron ore futures drop amid futures probe worries
* Outlook firm on capacity cuts, demand recovery
* Coking coal, coke surge on short supplies
SHANGHAI, March 1 Chinese steel and iron ore
futures extended losses on Wednesday amid worries the country's
top economic planner was investigating the recent surge in
China's National Development and Reform Commission (NDRC)
last month questioned futures brokers on whether speculation has
distorted commodity futures prices, Bloomberg reported this
week, citing people with knowledge of the matter.
But government efforts to cut capacity and seasonal recovery
in demand kept spot prices firm.
The world's top steel producer has determined to slash
capacity in coming years in an effort to restructure the economy
and reduce pollution. The latest moves include a series of
crackdowns on low-quality rebar production in some regions
including the eastern provinces of Jiangsu and Shandong.
"Steelmakers have low inventories of steel products and so
are raising production driven by high profits, and the
government's shutdown of some low-end capacity will continue
supporting the market," said Bai Jing, an analyst with Galaxy
Futures in Beijing.
Bai added that steel demand is improving seasonally as
construction activity picked up, with mills making profits as
high as 700 yuan ($101.85) a tonne.
The most active rebar on the Shanghai Futures Exchange
fell in the second session on Wednesday, down 1.2
percent at 3,522 yuan by 0210 GMT.
Iron ore on the Dalian Commodity Exchange had
dropped 1.2 percent to 696.5 yuan a tonne by 0210 GMT.
On the Dalian Commodity Exchange, cokig coal surged
more than 4 percent to 1,311 yuan a tonne and coke futures
jumped nearly 4 percent to 1,794 yuan a tonne, due to short
supplies of the two major steelmaking ingredients.
($1 = 6.8731 Chinese yuan renminbi)
(Reporting by Ruby Lian and Josephine Mason; Editing by Joseph