* China’s cabinet launches new leadership group to curb pollution
* Tangshan to deepen production cuts over summer
* Daily steel output, mill inventory dropped in late June -CISA
BEIJING, July 12 (Reuters) - China’s steel rebar futures hit their highest in 10 months on Thursday amid potential tight supply as the government intensifies efforts to clean up the environment.
On Wednesday, China’s cabinet launched a new cross-ministerial leadership group, headed by the vice-premier Han Zheng, to help draw up plans to tackle air pollution in northern regions.
“The high-class leadership group will certainly be a strong deterrent to environmental violations and may also restrain output at mills and mines,” said Zhuo Guiqiu, an analyst at Jinrui Futures.
And Tangshan, China’s biggest steelmaking city, has ordered steel mills, coke producers and utilities to cut output further for six weeks from July 20 until Aug 31 to improve its notorious air quality.
“With high environmental pressure, more regions may order their industrial plants to reduce emissions,” said Zhuo.
The most-active rebar contracts on the Shanghai Futures Exchange had risen 2.1 percent after earlier touching 3,960 yuan ($591.24) a tonne, its highest level since Sept. 6.
Spot steel prices edged up 0.2 percent to 4,320.36 yuan a tonne on Wednesday, data from consultancy Mysteel showed.
Daily crude steel output by major steel companies over June 21-30 reached 1.96 million tonnes, down 1.8 percent compared to mid-June, data from China’s Iron & Steel Association (CISA) showed on Wednesday.
Steel inventory at mills dropped over the same period, falling 24,700 tonnes to 11.42 million tonnes, CISA data showed.
Prices for steelmaking raw ingredients also climbed. The most-traded coking coal contract for September delivery rose 2.2 percent to 1,157 yuan a tonne. Coke futures were up 2.3 percent at 2,065 yuan at 0214 GMT.
Dalian iron ore futures gained 1.6 percent to 464 yuan, with investors saying increased profit margins at mills would offer some support to the raw material. ($1 = 6.6978 Chinese yuan renminbi) (Reporting by Muyu Xu and Aizhu Chen Editing by Joseph Radford)