The blast in Kunshan, a city in the province of Jiangsu near Shanghai, took place this morning inside a wheel hub polishing workshop owned by the Kunshan Zhongrong Metal Products Co. Ltd, the city government said.
More than 200 workers were at the site when the explosion rocked the plant.
Rescuers pulled out over 40 bodies while about 20 others died in hospitals, state-run Xinhua news agency reported.
An initial probe indicated that the explosion might have been caused by "dust" which ignited inside the workshop, officials said.
The blast left two huge holes in the factory's wall, with large equipment and pieces of broken glass scattered around.
A local radio reporter told Xinhua that she saw a patient, whose clothes and hair were completely burned off and his body "as dark as charcoal."
A medical member of staff at Kunshan Hospital of Traditional Chinese Medicine said most of the injured suffered burns.
"Every 10 minutes, an ambulance carrying the injured arrived at our hospital. It's the weekend, so we're sort of understaffed and have had to call for backup," the member said.
Doctors and nurses specialising in burns at Shanghai's Ruijin Hospital have arrived at Kunshan to help local hospitals, which are "crowded with injured patients," according to the hospital.
The Kunshan branch of the Red Cross Society of China has asked locals to donate blood.
Kunshan Zhongrong Metal Products, which is located 70 km away from Shanghai, has 450 employees on its rolls and listed General Motors as a client.
The factory has been cleared and an investigation is underway.
Officials have said the blast was a work safety accident.
No casualties were reported in that incident.
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