China Iron-Ore, Rebar Futures Tumble on Warning Over Unsustainable Rally

China's metals prices tumbled Wednesday as sentiment was battered by fresh warnings that the recent steel rally was unsustainable, the latest move by regulators to tame volatility in the futures market.

The main steel-rebar futures contract in Shanghai snapped a four-day rally to trade down 5.1% early Wednesday at 3,731 yuan ($560) a metric ton, on track for its biggest daily loss since May, while hot-rolled coil futures tumbled 5.7% to CNY3,812 a ton.

On the Dalian Commodity Exchange, iron-ore futures fell 5.4% to CNY569 a ton after soaring more than 20% over the past four sessions.

The China Iron and Steel Association has said that steel prices surged in July on a confluence of factors including stable demand, capacity cuts and policies to reduce pollution, and that it "goes against stable operation of the steel industry."

However, the price surge is unlikely to persist as new capacity is set to ease potential supply shortages, the CISA said in a statement late Tuesday.

"Investors fled the market out of rising pressure from policy makers, who want to avoid big fluctuations on the commodity market," said Ye Yanwu, research director at Chaos Ternary Futures.

In July, China's iron-ore futures rose 18% and steel rebar gained 15%.

--Yifan Xie

(END) Dow Jones Newswires

August 22, 2017 23:57 ET (03:57 GMT)