The unexpectedly swift recovery in China's steel production has sparked fears that a glut of exports could puncture steel prices as the global industry struggles to emerge from the economic downturn, rival steelmakers have warned.

SK Roongta, chairman of the Steel Authority of India Ltd (Sail), said Chinese over-production was “a point of concern” for the world's steel producers.

During the past year, producer margins have come under severe strain from falls in prices and high input costs. Global output fell more than 20 per cent in the first half of 2009.

The head of India's largest state-owned steel group said that Chinese production accelerated 15 per cent in the past quarter, beating forecasts of just reaching double-digit growth.

“We believed that China would grow, but the growth in the past three to four months has certainly been a surprise. I'm not sure this level can be sustained,” he said.

“The magnitude of the growth is a surprise; not the growth per se.”

China is by far the world's biggest steel- producing nation, with annual output of about 600m tonnes. Shipments from its steel plants are almost all used inside the country. However, in recent years, steel exports have started to overshadow imports.

In 2007, exports exceeded imports by 52m tonnes, leading to fears from some steelmakers that low-cost steel from China could start to push down steel prices.

Mr Roongta, who was speaking ahead of a meeting of the World Steel Association in Beijing this week, said the industry had been astonished by the surging recovery of Chinese steel mills.

Concerns were rising that the price of surplus Chinese steel would dictate prices in other markets, such as that of neighbouring India, which produces about 55m tonnes a year.

“The Chinese offering steel to Indian markets will have a bearing on us,” Mr Roongta said.

“If there is cheaper steel from China, buyers can use that for more leverage to strike their deals with us. Chinese prices will become benchmark prices for India.”

The Indian steel price index has softened this month. Mr Roongta estimated that hot-rolled flat steel would be priced at about $525 a tonne.

This week, Lakshmi Mittal, the chairman of ArcelorMittal, also warned that a world steel industry rebound could be blown off course by a strong rise in exports from China.