Chinese coking coal prices rose for a fourth straight session on Monday, recovering from a 2-1/2 month low hit last week, as investors bet on tighter supplies amid a crackdown on illegal mining by the world’s top coal producer.

The most-active coking coal futures on the Dalian Commodity Exchange were up 2.9 percent at 1,190 yuan ($171.66)per tonne at 0519 GMT.

Prices have gained 8 percent over the past four sessions after slipping to 1,106.5 yuan last week, the weakest since Oct. 17.

The market continues to digest a raft of policy announcements by the government aimed at closing inefficient, outdated coal mines and steel mills.

Shanxi province, the country’s top coal producer, said it plans to cap output and consolidate the industry around big producers over the next four years in a bid to boost effiency.

At the weekend, state media reported that the nation’s biggest steelmaking province Hebei expects to slash 31.86 million tonnes of steel and ironmaking capacity in 2017.

Coke was also higher, gaining 2.3 percent to 1,563 yuan per tonne.

While steelmaking raw material costs have been higher in the past few weeks, analysts believe steel mills have maintained their profit margins due to suspensions of operations as toxic smog blanketed the north of the country in recent weeks.

“This disruption to steel supply may be acting to boost margins for China’s domestic steel producers,” Barclays Capital said in a note, adding that margins have remained high at 69 percent.

The most-active rebar contract for May delivery on the Shanghai Futures Exchange was up 1.5 percent at 2,988 yuan per tonne.

Iron ore prices on the Dalian Commodity Exchange rose 1.5 percent to 555 yuan per tonne buoyed by robust demand from China, even as the Australian government warned of a steep decline in prices in 2017.

Confidence has recently been boosted by strong imports into China – December iron ore shipments from Australia’s Port Hedland terminal hit a record 37.4 million tonnes in December.

Domestic stocks CUS-STKTOT-IORE dipped 0.4 percent to 108 million tonnes last week, although they are still at 2-1/1-year highs.

Source: Reuters (Reporting by Josephine Mason; Editing by Richard Pullin)