October 10, 2018 / 7:34 AM / 2 months ago

UPDATE 1-Dalian coke rises 4 percent as coal hub to cut output

* Shanxi pledges to cut coking capacity, annual coke output

* Coke producers hike spot prices by 50-100 yuan a tonne

* Steel mills may limit restocking ahead of winter curbs - analysts (Updates closing prices)

BEIJING, Oct 10 (Reuters) - China’s Dalian coke futures jumped more than 4 percent on Wednesday as investors worried about tighter supplies after the major coal mining province of Shanxi vowed to reduce annual coke output.

The northwestern province on Tuesday pledged to cut coking capacity and coke production, as part of its long-term campaign against air pollution.

Coke producers in Shanxi will be given until Oct. 1, 2019 to meet stringent environmental standards or be shut down, according to a government statement.

They will also be encouraged to phase out small and outdated production equipment, the statement said.

“Buoyed by Shanxi’s plan on the coke industry and expectation of tight supply amid coming winter production restrictions, we expect prices in the futures market to rise in the short-term,” analysts from CITIC Futures said in a note in Mandarin.

In the spot market, some coke producers in northern China hiked selling prices by 50 yuan to 100 yuan ($7.23 to $14.46) a tonne as environmental checks intensified.

The most-active coke contract for January delivery on the Dalian Commodity Exchange jumped as much as 5.4 percent before market closed at 0700GMT, touching a high last seen since on Aug. 30. The contract settled 4.2 percent up at 2,458.5 yuan a tonne.

Dalian coking coal futures recovered from earlier losses and rose 2.1 percent to 1,363.5 yuan a tonne, after reaching a peak of 1,394 yuan, its highest level since Dec.4,2017.

However, analysts cautioned that steel mills would limit their restocking of raw materials as the winter heating season approaches, when steel mills will face production curbs, which may bring downward pressure on demand and prices.

Iron ore futures on Wednesday rose for a third consecutive day, up 1.6 percent to 515 yuan a tonne, driven by firm spot trade.

Benchmark spot ore, with 62 percent iron content, rose to $70.20 a tonne on Tuesday, up from $69.90 in previous session, according to data compiled by SteelHome.

The most-traded construction steel rebar contract on the Shanghai Futures Exchange closed 1.1 percent higher at 4,055 yuan.

$1 = 6.9171 Chinese yuan renminbi Reporting by Muyu Xu and Aizhu Chen; Editing by Richard Pullin and Vyas Mohan

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