Steel and iron ore futures in China extended their rally into a seventh session on Tuesday, with rebar hitting its highest since 2011 amid increased demand from the construction sector and with steel making raw material iron ore marking another record.

Steel appetite in China typically picks up at the end of winter, with the months of April and May seen as a peak season for demand as construction activity resumes amid warmer temperatures.

Steel mills are also seen ramping up their production in anticipation of additional demand as China is set to roll out more infrastructure projects to support its cooling economy.

The most active rebar contract on the Shanghai Futures Exchange rose as much as 2.9 per cent to 3,795 yuan ($565.23) a tonne, the highest level for the benchmark since September 2011. Hot rolled coil, used for cars and home appliances, climbed as much as 1.7 per cent to 3,985 yuan a tonne.

The increased demand for steel added support to iron ore, which had gained 15 per cent in a span of six sessions from March 29 to April 8 amid declining shipments to China from major producers in Brazil and Australia.

“Iron ore futures continued (their) upward trend as investors continue to fret about supply-side issues,” ANZ Research said in a note. “While the closures of Brazilian mines is the main focus, disruptions to Australian exports have rattled markets in recent days,” it said.

Brazil's iron ore exports in March fell 23 per cent from February and 26 per cent from a year ago, as top miner Vale SA’s operations were curbed following a fatal tailings dam disaster in January.

The most traded iron ore on the Dalian Commodity Exchange jumped to 720 yuan a tonne, the benchmark's highest since 2013, when the futures contract was launched.

While market participants were “on edge” amid reports that tropical cyclone Wallace was approaching the Western Australian coast, ANZ said the weather disturbance was “for the moment...not expected to have a big impact”.

Australia's iron ore miners such as BHP Group Ltd, Rio Tinto and Fortescue have reduced their output or shipment estimates after cyclone Veronica hit their operations towards the end of March.

The benchmark spot iron ore for delivery to China rose 1.1 per cent to $94 a tonne on Monday, according to SteelHome consultancy, the highest in nearly five years.

Other steelmaking raw materials were bucking the trend, with coking coal down 0.6 per cent at 1,247 yuan a tonne by 0154 GMT, while coke slipped 0.7 per cent to 2,029 yuan.

($1 = 6.7141 Chinese yuan)

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