* Iron ore set for biggest weekly gain in 4 months
* South32, Rio reports add to bullish iron ore sentiment
BEIJING, July 20 (Reuters) - China iron ore futures rose a fourth day on Thursday, holding near multi-month highs as speculative investors continued to add bullish bets amid hopes of robust steel demand, while coking coal eased on profit taking.
Even with the drop on Thursday, coking coal was on track for its best weekly performance since mid-January, up 8 percent, and iron ore was set for its biggest best gain in four months, having risen 11.4 percent since Friday.
Traders and analysts said some profit taking was expected after the strong run-up triggered by Monday’s stronger-than-expected GDP data that spurred expectations of increasing raw material demand even as overall manufacturing sputters.
Chinese government data on Tuesday showing record steel output also raised the prospect that mills would need to restock iron ore and coking coal.
“Traders appear to be questioning the sustainability of this upward trend, with the bid-offer spread tightening up,” said ANZ Research analysts in a note on Thursday.
The most-active iron ore futures contract was up 0.6 percent at 530 yuan ($78.36) a tonne at 0316 GMT. The contract earlier rose as high as 536.50 yuan, the most since May 2.
Coking coal for delivery in September was down 0.6 percent at 1,264.50 yuan. On Wednesday, prices rose to as high as 1,299.5 yuan per tonne, the most since early April.
China’s steel and iron ore have been some of the best performers among key Asian commodities as cuts in low-grade steel production capacity have reduced supply while demand has remained surprisingly strong.
Company production reports from Australia added to the bullish sentiment for coking coal and iron ore.
On Thursday, South32 Ltd said fourth-quarter coking coal production slumped 32 percent from the same period a year ago following an extended outage at its main Appin mine in Australia over concerns about gas leaks.
That came after Rio Tinto, on Tuesday lowered its forecast for shipments of iron ore this year by up to 10 million tonnes citing bad weather and ongoing work to modernise its rail lines.
The most-traded steel rebar contract on the Shanghai Futures Exchange was down 0.7 percent at 3,621 yuan per tonne. ($1 = 6.7635 Chinese yuan renminbi)
Reporting by Josephine Mason; Editing by Christian Schmollinger