* Ten cities in Hebei issue second-level smog alerts
* Alerts in effect from Friday to Monday
* China's equities surge on support pledge
(Adds Chinese equities, updates prices)
By Manolo Serapio Jr
MANILA, Oct 22 (Reuters) - Shanghai rebar steel futures
jumped more than 1 percent on Monday after 10 cities in China's
top steel-producing Hebei province issued second-level smog
alerts, prompting industrial plants to cut output.
The gains in steel prices also came alongside the rally in
Chinese stocks as Beijing pledged support for equity markets and
as China prepares to overhaul its income tax law for
individuals.
The "orange" pollution alerts in 10 cities, including top
steel producer Tangshan, began on Friday and will last through
Monday. Tangshan has ordered steel mills in the city to reduce
output of their sintering machine and shaft furnaces by half.
The most-active January rebar on the Shanghai Futures
Exchange closed 1.5 percent firmer at 4,154 yuan ($599)
a tonne. Hot rolled coil rose 0.9 percent to 3,901
yuan.
Apart from the smog alerts, Tangshan rolled out anti-smog
production cuts for winter, which analysts say appear less
restrictive than last year and could keep output high.
Based on a list of restrictions detailed in a local
government notice issued on Thursday, the average production cut
at mills in the city would come in at 30 percent-35 percent,
lower than last year's 42 percent, analysts said.
"Looking ahead, relaxed winter production controls and
incentives to produce more amid high steel margins will
eventually lead to oversupply risks and downward pressure on
steel prices and steel margins," Argonaut Securities analyst
Helen Lau said in a note.
Xuzhou, a city in China's No. 2 steelmaking province Jiangsu
announced plans to cut output of steel, coke and other raw
materials in winter, but did not detail by how much.
January iron ore on the Dalian Commodity Exchange
climbed 1.7 percent to 524.50 yuan a tonne. Coking coal
slipped 0.9 percent to 1,361.50 yuan a tonne, and coke
slid 1.2 percent to 2,359 yuan.
($1 = 6.9318 Chinese yuan)
(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin and
Sherry Jacob-Phillips)
