(Bloomberg) — Several Chinese commodity firms pared back their bullish futures bets at the request of the government, according to people with knowledge of the matter, a sign of Beijing’s increasing concern over soaring raw material prices.

Over the last two weeks, at least four major firms, including steel mills and commodity merchants, reduced their long positions in locally traded products including iron ore and coal after attending meetings with government officials, said the people, who asked not to be identified discussing a sensitive matter. At least two major futures brokerages were also advised by China’s exchanges to cap positions and trading volumes in contracts that are highly volatile, said two of the people.

In addition to the firms who were urged by Beijing to reduce commodity holdings, officials at several other Chinese raw material producers, traders and investment firms cut bets without being asked, partly on concerns over potential criticism from regulators, according to interviews with 20 trading managers at state-owned and private firms in the past two weeks. These officials asked to stay anonymous as they aren’t authorized to speak publicly.

Email inquiries to the Shanghai, Dalian and Zhengzhou futures exchanges weren’t answered. A fax inquiry to the National Development and Reform Commission, the country’s top economic planning body, didn’t receive a reply.

Inflation Angst

The move by the Chinese government to try to temper prices behind the scenes underscores how worried it is that the global raw-material price boom will feed into higher inflation and derail its post-pandemic economic comeback. Commodity prices soared to near their highest level in a decade this month, as surging futures of iron ore to grains to copper raise the specter of rising construction, food and manufacturing costs.

The impact is already being felt, with the country’s factory-gate prices jumping by the most since 2017 last month, adding pressure on officials to act to stem prices. Makers of products from lampshades to capacitors are also already seeing margins shrink as input costs rise.

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Most of the action so far has been rhetorical, including repeated calls from Premier Li Keqiang for action to rein in prices. There will be “zero tolerance” for monopolistic behavior and hoarding, the top planning department added. Market bodies also weighed in, with the Shanghai Futures Exchange pledging to curb unreasonable moves in its commodities contracts.

The jawboning has had some success, with the global commodity spot index sliding about 1% since peaking on May 12, when Li said dealing with the situation is of national economic urgency. Iron ore prices in Dalian have since fallen 21% as of Thursday, while reinforced steel bar prices in Shanghai have dropped by about one-fifth.

Still, the reduction in the bullish bets spanning products such as iron ore, base metals and coal hasn’t led to major declines in open interest because bargain hunters came into the market, said Jia Zheng, an analyst with Goldtrust Futures Co. in Shanghai.

Coking coal futures traded on the Dalian exchange slipped 0.1% on Friday, reversing an earlier 2% gain. Iron ore climbed 0.8%, while steel rebar added 1.8% in Shanghai, though both pared earlier advances.

It’s not just in financial markets where the Chinese government has added pressure. Some coal mining firms that hoarded inventories in anticipation of higher prices have been warned by the local government that their mining licenses could be revoked, the Chinese newspaper 21st Century Business Herald reported on Wednesday, citing a miner it didn’t identify. Coal companies are increasing their sales to mitigate rising prices, the newspaper said.

(Updates with analyst comment in 9th paragraph, prices in 10th)

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