The blast in Kunshan, Jiangsu province, left more than 120 people injured including several with severe burns, the state-owned Xinhua News Agency said.
Footage shot by residents showed huge plumes of thick, black smoke rising from the plant as the blackened and scorched bodies of victims were lifted onto the back of large trucks.
Many of the bodies were blackened by burns or a covering of soot.
Some survivors were seen sitting on wooden cargo platforms on the road outside the factory, their clothes apparently burned off and skin exposed, or being carried into ambulances.
The factory is operated by the Zhongrong Metal Products Company, a Taiwanese enterprise that according to its website was set up in 1998 and has a registered capital of £5.2million.
Its core business is coating and polishing aluminium alloy wheel hubs for General Motors and other firms.
Zhou Xu, 26, who worked nearby, said: 'We heard a really loud blast at about 7 a.m. this morning so we rushed out of our dormitories.
'First the ambulance came, then as the news surfaced in the media, many families - especially the wives - rushed to the site to see if their husbands were okay.'
One security guard said the blast shattered the windows of his guard house half a kilometre away.
There were more than 200 workers at the site when the blast occurred, the city's government told Xinhua.More than 120 people who were injured have been sent to hospitals in Kunshan and the nearby city of Suzhou.
Burns experts were drafted in from Shanghai 40 miles away to aid in the disaster and the authorities are believed to have set up four emergency blood donation centres.
The explosion occurred at 7.37am (12.37am UK time) at a workshop in the factory that polishes wheel hubs.
Rescuers pulled out more than 40 bodies and around 20 other people died in hospital, Xinhua said.
It is believed the explosion was caused when fine particles of the dust and powdered metal used to polish hubcaps caught alight in the air.
They could have to come into contact with a spark, an overheated surface or electrical discharge from machinery.
If the air was dense with dust, the explosion would have rippled across the factory floor.
Kunshan is about 600 miles south east of Beijing.
Calls to the city's government, police and the firm by the Associated Press went unanswered this morning. General Motors confirmed the factory is part of its network of suppliers.
Authorities have held two company executives to assist in the investigation, Xinhua reported.
The blast is believed to be the country's worst industrial accident this year.
Workplace safety is a major problem in China - the world's second-largest economy - where regulations are often ignored.
A fire at a poultry slaughterhouse in the northeast province of Jilin in June 2013 killed 120 people and was blamed on poor management, lack of government oversight and locked or blocked exits.
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