* Coking coal on track for 7th straight week of gains
* Iron ore set for biggest weekly gain in 4 months
* South32, Rio reports add to bullish iron ore sentiment (Recasts; Updating with prices,)
BEIJING, July 20 (Reuters) - China steel rebar and steelmaking raw material futures sank on Thursday as speculative investors booked profits from a recent rally for iron ore and coking coal that was spurred by hopes bumper steel production would drive demand for the products.
Even with the drop on Thursday, coking coal was on track for its seventh straight weekly gain, while iron ore and rebar were set for a fourth week of gains. Iron ore has risen 9.5 percent since Friday.
Traders and analysts said some profit taking was expected after the strong run-up triggered by Monday's stronger-than-expected data on China's gross domestic product that boosted expectations of increasing raw material demand even as overall manufacturing sputters.
Chinese government data on Monday 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-traded steel rebar contract on the Shanghai Futures Exchange closed down 4 percent at 3,496 yuan ($516.40) per tonne, erasing most of the gains of the past week.
The most-active iron ore futures contract closed down 1.9 percent at 517 yuan a tonne. The contract earlier rose as high as 536.50 yuan, the most since May 2.
Coking coal for delivery in September ended down 2.5 percent at 1,241.50 yuan for its biggest one day loss in about six weeks. On Wednesday, prices rose to as high as 1,299.50 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 had previously 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. ($1 = 6.7699 Chinese yuan renminbi)
Reporting by Josephine Mason; Editing by Christian Schmollinger