MANILA (Reuters) - Chinese coke futures surged nearly 4 percent to their highest in seven years on Thursday amid worries China's push to curb output as part of its anti-pollution campaign would tighten supply of the steelmaking raw material.
The rally in coke - the processed form of coking coal - followed a recent surge in steel prices to six-year peaks. China's smog war has seen its cities restricting industrial production this year, including of steel and coke, ahead of tighter curbs this winter.
The most-traded January coke on the Dalian Commodity Exchange <DCJcv1> closed up 3.6 percent at 2,565 yuan ($371) a tonne, just off the day's peak of 2,567 yuan, its strongest level since August 2011.
China's major coal mining hub, Shanxi province, which produced a fifth of the country's total coke output last year, plans to curb industrial output voluntarily during the next three winters as part of its 2018-2020 anti-pollution crackdown.
It will also order 40 percent of coke plants to complete emission control upgrades by Oct. 1 this year.
Coking coal futures <DJMcv1> cut intraday losses to end 0.2 percent lower at 1,264.50 yuan per tonne, after falling as much as 2.4 percent.
Iron ore <DCIOcv1> closed 2.1 percent weaker at 493.50 yuan a tonne, but off the day's trough of 482.50 yuan, a two-week low. Construction steel product rebar on the Shanghai Futures Exchange <SRBF9> gained 0.2 percent to 4,163 yuan a tonne.
On Wednesday, spot iron ore for delivery to China's Qingdao port <.IO62-CNO=MB> fell 1.2 percent to $67.21 a tonne, the lowest since Aug. 2, according to Metal Bulletin.
Worries over China's economic health weighed on iron ore prices earlier in the day. Data earlier this week showed China's fixed-asset investment increased at the slowest pace on record in July and retail sales also softened amid an escalating trade dispute with the United States.
"While global investors fret about global economic growth, Chinese investors remained convinced recent changes to fiscal policy will support steel and iron ore demand," ANZ analysts said in a note.
Beijing is stepping up infrastructure spending and China's state planner has approved a $14 billion expansion of the urban rail network in the eastern city of Suzhou.
Also aiding sentiment, China said it will hold a fresh round of trade talks with the United States in Washington later this month, offering a glimmer of hope for progress in resolving a conflict that has kept world markets on the edge.
(Reporting by Manolo Serapio Jr.; Editing by Amrutha Gayathri and Sherry Jacob-Phillips)
