MANILA: Dalian coke hit a contract high on Tuesday, buoyed by capacity cuts in key producing provinces in China, while iron ore retreated after a five-day rally as port inventories of the steelmaking ingredient climbed to their highest since February.

The most-traded coke contract for January delivery on China’s Dalian Commodity Exchange closed 0.8% higher at 2,248.50 yuan ($336.04) a tonne, after hitting a contract-high of 2,265 yuan earlier in the session.

Dalian iron ore fell 1.3% to 787 yuan a tonne after five straight sessions of gains. Iron ore on the Singapore Exchange slumped 1.6% to $112.71 a tonne by 0703 GMT.

Supply of coke, the processed form of coking or metallurgical coal that is also used in steelmaking, could further tighten as more production capacity cuts are expected in Shanxi province, Sinosteel Futures analysts said in a note.

At the same time, demand for coke remained robust given still-high molten iron output of Chinese steel producers, they said.

“The current output of molten iron is significantly higher than the levels of the same period in previous years,” Sinosteel analysts said.

The surge in coke prices in China, the world’s top steel producer, is reminiscent of the 2018 rally that pushed Dalian futures to record highs as Beijing took steps to curb output, causing inventories to shrink.

Dalian coking coal slid 2.4% after a three-day advance.

Imported iron ore stocked at Chinese ports climbed for a sixth consecutive week to 128.95 million tonnes as of Oct. 30, the highest since mid-February, according to SteelHome consultancy.

Spot iron ore traded at $118.50 a tonne on Monday, SteelHome data showed, the strongest since October 22.

Construction steel rebar on the Shanghai Futures Exchange was flat, while hot-rolled coil slipped 0.2%. Stainless steel lost 1.3%. —Reuters