One and a half years after the Chinese government violently burst the stock market bubble, leading the massive losses among retail investors, and months after China's third housing bubble since the financial crisis appeared to have peaked, also China has found itself with yet another hot-money funded bubble: commodities. And perhaps in hopes of intercepting this latest mania before it gets too big, overnight China’s top economic planner, the National Development & Reform Commission - not a market regulator, but the core agency behind China's goalseeked economic data - announced it is investigating whether speculation has "distorted" commodity futures prices, due to concerns that the recent rally will drive inflation higher, according to Bloomberg.

In recent weeks, the NDRC has questioned futures brokers whether "price distortion" had occurred, which is a polite way of saying the buying mania has gone too far. The agency is worried over the potential impact on producer and consumer prices. China's worries are understandable: with commodity prices surging, whether due to speculators or simply tight supply and rising demand, China's producer prices soared in January by 6.9%, the highest level since the inflationary scare of 2011.

This is the second time China has intervened in the commodity market in the past year: Beijing tightened rules and raised fees on commodities trading last spring, as it sought to clamp down on a speculative frenzy that spurred a rapid run-up in prices and unprecedented volumes. As shown below, when it comes to commodities in China, traders periodically swarm any given asset class, sending it through the roof, only to pull back once the price starts to drop or when the government hints at an imminent crackdown on buyer euphoria.

Despite the government's best efforts however, due to an overabundance of hot money, steel and iron ore futures have continued to rise on government stimulus, capacity cuts and a steadying in the economy of the world’s biggest metals consumer. Despite the occasional wipe out, most recently in December...

... the levitation in China's commodity sector has continued. Steel reinforcement bar on the Shanghai Futures Exchange rose to its best level since Dec. 2013 on Monday, while iron ore on the Dalian Commodity Exchange was close to its May 2014 peak. However, trading in the contracts remains well below last year’s heady heights.

On Sunday, Fang Xinhai, vice chairman of market regulator, the China Securities Regulatory Commission, said that China doesn’t want inflated trading volumes, according to an online transcript.

Suggesting that yet another government intervention in the commodity market may be imminent, he said last year’s crackdown on speculation was “satisfactory” and that regulators will “stick to last year’s philosophy” when it comes to supervising futures. He added that the government will look at new measures to enhance pricing, such as attracting more industrial users to participate in the market.

The NDRC has also consulted with institutions including equity brokers on the outlook for commodity prices, according to Bloomberg's sources. That's about as close as Beijing gets to warning the country's brokers that the Politburo is displeased with how high prices have risen. All else equal, the near-term price path for Chinese commodities is likely lower.