Shanghai steel rebar futures opened December higher on Monday, supported by evidence that the manufacturing sector of the world's No.2 economy, China, stayed at a brisk pace last month.
Firm domestic and foreign demand helped China's official Purchasing Managers' Index hold at an 18-month high of 51.4 in November, ahead of market expectations for a reading of 51.1.
The PMI for the country's steel sector rebounded to 49 from 47.5 for the same period, spurred by a recovery in new orders, said Jinrui Futures analyst Zhou Ting in Shenzhen, citing data from the China Federation of Logistics and Purchasing.
"This could mean that steel demand in December would be better than we estimated previously," said Zhou, who sees rebar trading near 3,750 yuan this month.
The most-traded rebar for May delivery on the Shanghai Futures Exchange rose 0.4 percent to 3,684 yuan ($605) a tonne at 0253 GMT, gaining for a third session in a row.
Rebar, used in construction, rose less than 1 percent last month as lean demand limited a recovery in prices from losses of more than 5 percent in September and October.
A separate reading from HSBC put China's overall PMI at 50.8 in November, down from 50.9 in the prior month but higher than an initial reading of 50.4.
"Overall, the November PMIs continue to point to stable domestic economic conditions. But the details appear to support our view that growth momentum has softened in the fourth quarter," Barclays Capital economists said in a note.
Barclays forecasts China's gross domestic product growth to slow to 7.6 percent in the fourth quarter from 7.8 percent in July-September.
At the Dalian Commodity Exchange, the most-active iron ore for May delivery was down 0.4 percent at 937 yuan a tonne, after rising for the past two sessions.
Chinese demand for iron ore mostly held up in November as high steel production sustained appetite among mills for the raw material.
Spot iron ore prices ended November with a gain of 3.4 percent, the highest monthly increase since August as prices bounced off 1-1/2-month lows hit in late October and stabilized between $135 and $137.
Iron ore for immediate delivery in China's Tianjin port .IO62-CNI=SI was unchanged at $136.40 a tonne on Friday, said data compiler Steel Index, as high supplies limited gains.
Iron ore stocks at major Chinese ports continued to rise last week, increasing by nearly 2 million tonnes to 87.4 million tonnes, according to data from industry consultancy Mysteel.