China will strengthen its management of commodity supply and demand to curb "unreasonable" increases in prices and prevent them being passed on to consumers, the country"s cabinet said on Wednesday, as it urged coal producers to boost output. Prices for commodities such as coal, steel, iron ore and copper - of which China is the world"s biggest user - have surged this year, fuelled by post-lockdown recoveries in demand and easing liquidity globally. But they extended recent losses after the cabinet"s latest comments. China will step up adjustments on the trade and stockpiling of commodities and reinforce inspections on both the spot and futures markets, state broadcaster CCTV reported the cabinet meeting chaired by Premier Li Keqiang as deciding. It will crack down on malicious trading and investigate behaviour that bids up prices, according to the report. The country also urged coal producers to boost output to meet peak demand in summer, the cabinet said. China"s coal production in April fell to its lowest since July 2020. Reacting to the report, thermal coal futures on the Zhengzhou Commodity Exchange plunged as much as 7.9% when night trading began at 1300 GMT, adding to losses made in the previous five trading days after the cabinet resolved to cope with rising commodity prices. In Dalian, prices for steelmaking ingredient iron ore slumped as much as 7.5% after closing down 3.3% in the previous session. On the Shanghai Futures Exchange, steel rebar and hot-rolled coil dived around 6%, while base metals such as copper were also in the red. China will maintain stable monetary policy and keep yuan exchange rates basically steady, according to the cabinet, which added that it will help small and micro firms to cope with production and operation difficulties amid rising costs. "(China) will implement tax reduction or exemption for small and micro companies... strengthen relending, rediscounting and guide banks to expand credit loans," the report said. Our Standards: The Thomson Reuters Trust Principles.