Shares in major steel firms in China and Japan rallied, fuelled by a solid earnings outlook for the sector, analysts said.
"Investors are buying steel shares as the prices of major steel firms' steel plate, their main product, has been rebounding and is expected to rise further," said Shanghai-based metals analyst Helen Lau at Daiwa Securities.
Shares in Japan's Nippon Steel were up over 3% in the afternoon session, when the second-largest steel firm in the world is expected to report higher quarterly earnings on increased steel prices despite higher depreciation and raw materials costs.
Baoshan Iron and Steel (Baosteel), China's largest steelmaker, saw its shares surge as much as 6.34%, outperforming gains in the Shanghai Composite Index.
Other Chinese steel plays, such as Angang Steel, Maanshan Iron and Chongqing Iron also put in a strong performance in Shanghai and Hong Kong.
Shares in South Korea's POSCO, which reported a 55% jump in second-quarter net profit earlier this month on high prices and strong demand, were up despite the overall weaker South Korean stock market.
POSCO said this month that it would invest $2 billion to boost output of steel plate for ships as the booming shipbuilding industry triggers higher demand.
Analysts have said the outlook for Asia steel giants including POSCO, Japan's JFE Holdings and Baosteel is steady for the second half, although earnings momentum could slow a bit after sharp gains in the first three months of 2007.
Price rises reflected a booming steel market in Asia, after a weak start to 2006, which has helped company profits rebound over the last nine months.
A number of investment banks, including Goldman Sachs and JPMorgan, upgraded price and earnings outlooks for major players in the sector in reports seen last week.
Japanese analysts have said they expect further price rises at home and steady export prices to boost profits of the four leading Japanese mills -- Nippon Steel, JFE, Sumitomo Metal Industries and Kobe Steel -- by 20 billion to 30 billion yen (US$164 - US$245 million) above their previous forecasts for the year to March 2008.
Shares in other Chinese steel firms, including Bengang and Wuhan Iron and Steel , were also among Monday morning's top gainers on the Shanghai bourse.