* Beijing expected to step up efforts to curb steel overcapacity
* Steel mills make high profit amid capacity cuts
* Iron ore futures extend gains
SHANGHAI, Aug 22 (Reuters) - Chinese steel futures rose on Monday, buoyed by expectations of more government efforts to cut overcapacity over the next few months.
China's efforts to tackle its excess capacity have helped strengthen steel prices this year and boosted mills' profits as tighter environmental rules have led to closures and output curbs among domestic mills.
"We see balance between supply and demand now, and in the longer term, the government has determined to step up efforts to cut overcapacity," said Xia Junyan, an investment manager of Hangzhou CIEC Trading Co in Shanghai.
Steel mills are making a profit up to 500 yuan ($75.02) a tonne amid Beijing's moves to cut capacity.
The most-traded January rebar, a construction steel product, on the Shanghai Futures Exchange SRBcv1 climbed 1.4 percent to 2,575 yuan at 0245 GMT.
On the Dalian Commodity Exchange, iron ore futures DCIOcv1 rose 1.8 percent to 445.5 yuan at 0245 GMT.
Iron ore for delivery to China's Tianjin port .IO62-CNI=SI edged up to $61 a tonne on Friday, and it ended last week up 1.3 percent, according to The Steel Index. ($1 = 6.6648 Chinese yuan renminbi)