The most active October rebar futures contract on the Shanghai Futures Exchange rose to around a one-week high of 4,893 Yuan ($752) per tonne, up 4.1 percent from the previous close.
"Steel inventories have fallen for 8 consecutive weeks, though production is high, suggesting demand is picking up," said Wang Dezhi, an analyst with Orient Securities Futures.
Spot iron ore prices were unchanged on Monday, with offers of Indian ore with 63.5 percent iron content standing at around $185-187 per tonne, including freight, traders said.
China's third-biggest steelmaker Wuhan Iron & Steel expects steel demand in the country to simmer down this year, and the iron ore supply shortage to continue in the long term.
Metal Bulletin's 62 percent gauge, one of the three major indexes used for global iron ore pricing, rose for the second straight day by 18 cents to $179.1 a tonne on Friday.
The other two indexes - the Steel Index 62 percent and Platts 62 percent iron ore index suspended quotations on Friday due to holiday.