How China's energy crisis has sent commodity markets reeling

TOKYO -- China's curbs on carbon-intensive industries and the ensuing energy crisis have scrambled supply and demand calculations for some of the world's key commodities, sending prices on a wild ride that market players say may not yet be over.

Directives from Beijing this year have crashed prices for iron ore and inflated those for aluminum, among others, but disruption in the country's industrial heartland and concern about the property sector leave some predicting more policy swerves.

With the government of President Xi Jinping determined to cut carbon intensity and emissions across industry -- and achieve net zero emissions by 2060 -- "attention will focus on China and how policy evolves from now on," said Tatsufumi Okoshi, a senior economist at Nomura Securities.

A central focus for traders is the steel industry, which has been a main target of environmental policy action and whose fate is tied up with a construction boom that looks in jeopardy. The price of iron ore, steel's main ingredient, surged over 40% between the start of the year and mid-July, only to slump by almost half before a low at the start of this month.