The blast occurred at around 3 pm (0700 GMT) at a Baogang United Steel plate plant in Baotou city in the Inner Mongolia autonomous region, state news agency Xinhua reported.

"As of 5:30 pm on Sunday, local emergency management and fire rescue authorities reported two fatalities and five people missing," Xinhua said.

"Sixty-six individuals have been sent to hospitals for treatment, three of whom are in severe condition."

Footage on social media showed collapsed ceilings and rubble at the factory, huge plumes of smoke overhead and fire engines at the scene.

Other videos showed an object being blasted into the sky as smoke billowed from the factory and a large, cylindrical hunk of metal that appeared to have come from the plant lying among the rubble of buildings.

Residents kilometres away reported that the explosion shook their homes and shattered windows.

The cause of the incident is being investigated, Xinhua said, while the rescue operation continues.

Industrial accidents are common in China due to lax safety standards.

An explosion at a fireworks factory in Hunan province in central China in June killed nine people and injured 26 others.

In 2015, blasts at warehouses containing flammable chemicals in the port city of Tianjin killed more than 170 people and injured 700 others.