BEIJING – Chinese steel futures dropped on Wednesday due to a plunge in raw material prices. This was despite government intervention to lower commodity prices. However, demand for the industrial metal remained subdued by output controls.

The most active coking coal and coke futures on Dalian Commodity Exchange closed down 9% at 2,704 and 3,430 Yuan respectively, just shy of their daily trading limits.

After the state planner stated that it had requested major coal-producing provinces to investigate and regulate illegal storage locations and crack down on hoarding, thermal coal plunged to 10% below its trading limit.

Benchmark iron ore futures prices on the Dalian exchange for January delivery fell 3.9% to 673 Yuan by 0234 GMT. According to SteelHome consultancy, spot prices for iron ore with 62% iron content were unchanged at $121.5 per tonne on Tuesday.

Analysts at CITIC Securities stated in a note that the Winter Olympics and energy consumption controls had affected steel demand.