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The Hebei government ordered an investigation into production quality at several induction furnaces in the province, according to Metal Bulletin. Photo: Andrey Rudakov

The surge above the $US80 a tonne mark came after the Hebei government ordered an investigation into production quality at several induction furnaces in the province, according to Metal Bulletin.

Following the suspension of production at a number of furnaces in Jiangsu province, Hebei province has announced it too is to to conduct inspections on several induction furnaces on December 6 to prevent the production of "sub-standard" semi-products, Metal Bulletin reported.  

Chinese rebar steel futures surged nearly 7 per cent to their highest since April 2014. Coking coal and coke also sharply higher. The advances marked the fifth consecutive day of gains for both steel and iron ore.

Traders are replenishing steel inventories on hopes firm demand will be sustained next year as China's manufacturing sector recovers and Beijing spends more on infrastructure projects.

At the same time, ongoing Chinese environmental inspections in Beijing's efforts to tackle pollution have restricted output at steel mills, tightening the market.

"The reason why the steel market remains strong even though seasonally it's a weak period is mainly due to supply-side tightness," said Helen Lau, analyst at Argonaut Securities. "Also the macroeconomic momentum is different from the same period last year."

The most-traded rebar on the Shanghai Futures Exchange rose as far as 3428 yuan ($US498) a tonne before trimming gains to close at 3382 yuan, up 5.1 per cent.

Construction activity typically slows in China during winter, but analyst Lau said mills continue to lift steel output hoping prices will remain high as the economy mends.

Activity in China's manufacturing sector expanded at the quickest pace in more than two years in November and growth in its services sector accelerated to a 16-month high.

Tracking stronger steel prices, iron ore on the Dalian Commodity Exchange rallied as much as 7.2 per cent to 648.50 yuan per tonne, the highest since January 2014. It closed up 6.5 per cent at 644.50 yuan.

Coking coal rose 5.2 per cent and coke jumped 6.7 per cent.

"Iron ore is just a steel play. If the steel price is good that will support the iron ore price," said Lau. Soaring futures have lifted bids for physical iron ore cargoes.