Dalian iron ore rallied for a fifth consecutive session on Wednesday and was set for a weekly gain of more than 6%, buoyed by hopes of improved demand for the steelmaking ingredient after the Lunar New Year holiday in China.

Top steel producer China, home to world's most liquid iron ore futures market, heads for a week-long holiday beginning on Thursday.

Most-traded May iron ore on China's Dalian Commodity Exchange rose 1.4% to 1,061 yuan ($164.82) a tonne by 0330 GMT.Most-active March iron ore on the Singapore Exchange climbed 0.4% to $159.20 a tonne.

Although physical and derivatives traders are heading out of the market ahead of the holiday, the SGX benchmark was also on track for a weekly gain of more than 5%, with a positive outlook for steel industries outside China also providing a boost.

Spot iron ore bound for China traded at $161 a tonne on Tuesday, its highest since Jan. 27, according to SteelHome consultancy.

Support is also intact from tight global supply that may persist this year, despite additional output expected from Brazil's Vale SA.

"Supply increases from the low-cost majors will be restrained again," said Justin Smirk, senior economist at Westpac Group in Australia, forecasting a deficit of around 27 million tonnes this year.

"Australian miners' output is expected to lift only marginally, leaving the Brazilian giant, Vale, crucial to the overall recovery in supply," he said in a monthly outlook.

Westpac expects global crude steel output to rise around 5% this year, with production seen rising 2% in China. It projects a 4% rise in Chinese iron ore imports this year, after a 12% increase last year.

Rebar on the Shanghai Futures Exchange rose 0.5%, while hot-rolled coil added 0.4%. Stainless steel advanced 0.7%.

After a four-session rally, coking coal slipped 0.4% while coke lost 1.2%.