China intensified its weeks-long campaign to cool a raw-materials boom, vowing severe punishment for violations ranging from excessive speculation to spreading fake news.

The government will show “zero tolerance” for monopolies in spot and futures markets, and for speculation and hoarding, the National Development and Reform Commission said in a statement after leaders of top metals producers were called to a meeting on Sunday.

The push to rein in surging metals prices rippled across markets, with steel dropping more than 5 per cent and iron ore tumbling by close to the daily limit.

“With policy risk shifting toward government intervention, prices will surely be affected by market sentiment,” said Li Ye, an analyst at Shenyin Wanguo Futures Co. in Shanghai. “The rapid surge in commodity prices has badly affected manufacturers and market orders, leading to losses and defaults.”

Commodities have risen rapidly this year — with a Bloomberg gauge of materials near the highest in a decade — as optimism over the global economic recovery from the pandemic improved the demand outlook. That’s fueled a debate about the risk that inflation poses as the pandemic recedes.

In targeting commodity prices, Beijing is fighting trends over which it has only partial control as the world economy reboots with supply chains stretched. But the government is also tackling the consequences of its own efforts to reduce greenhouse gas emissions, which have contributed to price gains.

The NDRC’s statement is the toughest comment yet from the government, which started warning about higher raw materials prices in April. The officials from the iron ore, steel, copper and aluminum firms that met with five state agencies in Beijing on Sunday were told excessive speculation and rising international prices were to blame for recent advances.

There’s been an unusual amount of attention from policy makers on commodity prices in recent weeks. China’s factory-gate prices rose at the fastest pace in more than three years in April, sparking concerns that costlier raw materials could hamper the economic recovery or feed into higher consumer prices.

The deputy governor of the People’s Bank of China pledged a “basically stable” yuan in a statement on Sunday, right after another central bank official said the currency should appreciate to offset the rising cost of commodity imports. The comments from the official were later deleted.

That Beijing is dealing with a problem partly of its own making is most evident in steel, where prices spiked to records after the government set targets on output curbs and ordered production to fall this year. Instead, output surged to record levels in April.

“Another week, another Chinese government announcement trying to soothe the self-inflicted wounds caused by regular statements on steel capacity reforms, which fueled steel prices and margins,” said Atilla Widnell, managing director of Navigate Commodities.

Chinese steel rebar futures were 3.2 per cent lower by close of the morning session at 11:30 a.m. local time, while hot-rolled coil fell 3.6 per cent and iron ore dropped 4.7 per cent.

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