(Yicai) July 23 -- Prices of key Chinese bulk commodities such as polysilicon and coking coal, which are essential in solar panel and steel production, surged to new highs today amid investor expectations of government action to curb overcapacity.

Polysilicon futures on the Guangzhou Futures Exchange climbed 5.5 percent to CNY50,080 (USD6,990) per ton, reaching the daily limit of 12 percent intraday and setting a new record since the contract’s launch last December. The contract has gained 53 percent so far this month.

Coking coal futures on the Dalian Commodity Exchange jumped 11 percent to CNY1,135.5 (USD159) per ton, the highest level in four months, bringing this month’s increase to about 38 percent. Coke futures rose 3.8 percent to CNY1,707.5 (USD238) per ton, up 22 percent in July.

Since the beginning of the month, China has reinforced its policy stance on curbing excessive industrial raw material output, following years of weak demand that have weighed on prices and profits.

At a meeting on July 1, the Central Financial and Economic Affairs Commission emphasized the need to curb low-price, chaotic competition, improve product quality, and facilitate the orderly exit of outdated production capacity.

On July 18, Xie Shaofeng, chief engineer at the Ministry of Industry and Information Technology, said work plans targeting 10 major sectors -- including steel, non-ferrous metals, petrochemicals, and building materials -- will soon be released to support industrial restructuring and eliminate outdated capacity.

Driven by these policy signals, the market anticipates new supply-side structural reform measures that could boost commodity futures prices following sharp earlier declines, Zhou Fuhang, a researcher at Nanhua Futures, told Yicai.

However, despite the government's push, it remains challenging to reduce capacity in the short term, and demand for industrial goods has not seen significant growth. As a result, bulk commodity price increases may be limited over the medium to long term, an industry insider in the chemical sector told Yicai.

Editors: Dou Shicong, Emmi Laine