China's steel rebar futures climbed for a third session on Wednesday, rising as much as 2.8 percent, reflecting concerns about a possible tightening of supply as the country sends inspection teams to mills across the nation.
The government is sending 18 inspection teams to inspect low-end steel plants to prevent them from reopening after a crackdown on low-tech steel furnaces ended on the deadline of June 30, according to a report by the Xinhua News Agency.
China in the first half of the year closed around 120 million tons of low-grade annual steel capacity, which was mostly for making construction industry products.
The world's largest steel producer has been clamping down on production of low-grade rebar in a bid to cut excess supply and help tackle pollution.
"Steel supply is limited by inspections, while new capacity has not been released. This provides momentum for the price rally," said Xu Bo, analyst at Haitong Futures.
Analysts estimate China's total steelmaking capacity at about 1.2 billion tons, with an annual surplus of as much as 400 million tons.
The most-active steel futures on the Shanghai Futures Exchange rose 0.79 percent to 3,568 yuan ($528) a ton during the afternoon trade after touching a high of 3,639 yuan in the morning session.
Spot rebar prices gained 0.25 percent to 3,928.21 yuan a ton on Tuesday, according to Shanghai-headquartered industry news site Mysteel.
September coking coal prices gained nearly 2 percent on Wednesday to 1,276.5 yuan a ton.
