home Latest News RPT-China's smog crackdown roils niche commodities markets – Nasdaq

RPT-China's smog crackdown roils niche commodities markets – Nasdaq

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    * Environmental inspectors head to 8 regions this week
    * Beijing aims to clean up 28 cities ahead of winter
    * Lead, zinc mines in Sichuan close ahead of checks

    BEIJING, Aug 9 (Reuters) - China's push for blue skies is
roiling supplies and boosting prices of key raw materials from
soymeal to ferroalloys as the government ramps up smog checks
and forces some factories in the world's top commodities market
to close or suspend operations.
    With soymeal and gasoline prices surging, Shandong, China's
industrial and agricultural heartland, offered a snapshot into
the impact in the market as environmental inspectors started to
crisscross the eastern province. Shandong is one of eight
provinces and regions now facing a fourth round of inspections
by China'sMinistry of Environmental Protection. [nL4N1KN2RX]
    Soymeal at Rizhao, in Shandong, <SM-EXFRZH-STD>, has risen
almost 3 percent this week, hitting a three-week high of 2,840
yuan($424.32) per tonne on Wednesday even as a domestic glut
weighs on the market.
    Major soybean crushers there, accounting for about 10,000
tonnes of daily crushing capacity - or 2 percent of China's
total daily capacity - were expected to suspend operations this
week ahead of environmental checks, according to traders and
analysts who had spoken to the plants. Reuters could not confirm
the moves.
    "Commodities prices are rallying on the news of more
environmental checks....We are expecting these tougher checks to
continue until the air quality improves," said Lin Boqiang,
energy expert with Xiamen University.
    Central government is under pressure to clean up 28 cities
by forcing steel, aluminium and cement plants to cut output by
September to tackle winter smog. [nL3N1GS0RF]
    As well as Shandong, teams will head to Jilin, Zhejiang,
Hainan, Sichuan, Tibet, Qinghai and Xinjiang over the next two
weeks to check for any industrial plants violating pollution
    Wholesale gasoline prices in Shandong rallied amid concerns
the latest crackdown may crimp refinery production, even as the
market remains awash with product.
    Average prices of the most popular 92 grade were at 5,550
yuan($831.06) per tonne this week, up from 5,440 yuan last
week, according to an assessment by Shandong-based oil
consultancy Zibo Longzhong Information.
    "Many small blenders were shut because either they don't
have a license or don't meet basic emission standards," said Li
Yan, oil analyst at the consultancy.
    To the west, checks in Sichuan were upending ferroalloys and
nonferrous markets. Prices of vanadium, used to strengthen steel
and mainly produced in Sichuan, <VNIR-FA-SHMET> have more than
doubled over the past month.
    Zinc <SZNcv1> and lead <SPBcv1> in Shanghai rallied over 3
percent on Wednesday as 60 percent of local lead-zinc mines
underwent shutdowns for month-long maintenance during the
inspections, Antaike analysts said.
    While the current disruption may only last a few weeks,
sudden supply jolts and price swings in niche markets are likely
to continue as regulatory scrutiny ramps up ahead of winter.
    Analysts also agree that the government's years-long push to
remove excess capacity in large bloated heavy industries are
also starting to take hold, providing support in the long term
for prices of aluminium and steel.
    Steelmakers in the smog-prone northern Chinese province of
Hebei will be forced to halt operations next month if they fail
to meet tough new pollution restrictions, the local government
said in a notice on Wednesday. [nL4N1KV1JH]

($1 = 6.6782 Chinese yuan renminbi)

MAP: China'sEnvironment Ministry is set to embark on a round of
 mine inspections    http://reut.rs/2fqXvs5
Environmental crackdown roils China's commodities markets    http://reut.rs/2fsPxhR
 (Reporting by Meng Meng, Hallie Gu and Josephine Mason;
Additional reporting by Tom Daly; Writing by Josephine Mason;
Editing by Kenneth Maxwell)
 ((Josephine.Mason@thomsonreuters.com; +86 10 66271210; Reuters
Messaging: josephine.mason.reuters.com@reuters.net))