* Gains spurred by China's drive to tackle steel overcapacity
* Shanghai rebar, Dalian iron ore near multi-week highs
* China 2016 iron ore imports hit record 1.024 bln T (Adds details on China data, updates prices)
By Manolo Serapio Jr
MANILA, Jan 13 (Reuters) - Chinese steel and iron ore futures hovered near a multi-week high on Friday, posting their best week since November amid Beijing's resolve to trim down its bloated steel sector.
The main driver this week was China's move to shut production of low-grade steel products by the end of June, as it tackles both overcapacity and chronic smog.
The most-active rebar on the Shanghai Futures Exchange eased 0.6 percent to close at 3,194 yuan ($463) a tonne. Earlier in the session, it hit 3,247 yuan, near Thursday's three-week high.
The construction steel product gained almost 9 percent this week, the most since late November.
Beijing's latest crackdown against sub-standard steel, targeting small mills that run high-polluting furnaces, will affect about 4 percent of the country's steel output.
Chinese authorities have dispatched 12 inspection groups to some areas including top steelmaking province Hebei, as well as Henan, Guangxi and Heilongjiang, to oversee the move.
Iron ore on the Dalian Commodity Exchange closed up 0.2 percent at 607 yuan per tonne after earlier touching a four-week high of 619 yuan. The contract rose 11 percent this week.
Demand for the steelmaking raw material has been quite stable, traders said, with Chinese mills still favouring high-grade material to cope with costly coal prices.
"Steel mills' profits are still ok so they would like to use better grade material," said a trader in Beijing. "Mills also need to buy some stocks to prepare for the long Spring Festival holiday."
Chinese markets will be shut for a week for Lunar New Year break from late January.
Iron ore for delivery to China's Qingdao port .IO62-CNO=MB rose 0.7 percent to $80.99 a tonne on Thursday, according to Metal Bulletin. It was the highest for the spot benchmark since Dec. 19, bringing its weekly gain so far to 6.2 percent, also the biggest since late November.
"Iron ore prices will remain elevated in the coming months as speculative activity from positive investor sentiment on the Chinese infrastructure sector rolls on," BMI Research said in a note.
"However, impulsive increases in production due to the price rebound, by junior miners, especially those in Australia, could further flood the oversupplied seaborne market, pushing prices even lower in the second half of 2017."
China's iron ore imports rose 7.5 percent to a record 1.024 billion tonnes in 2016, and analysts say purchases could stay high this year.
$1 = 6.8915 Chinese yuan Reporting by Manolo Serapio Jr.; Editing by Randy Fabi and Sherry Jacob-Phillips