China, the world’s biggest steel producer, is exporting at the highest level in two years, exacerbating a global glut that may hurt competitors such as ArcelorMittal and U.S. Steel.

Monthly shipments abroad rose to 8.7 percent of domestic output last month, the highest proportion since July 2010. Chinese steel mills, set for a record production in 2012, are ramping up overseas sales to avoid a softer domestic market, where prices for the commodity have dropped to a two-year low.

ArcelorMittal of Luxembourg, which last week reported a 28 percent slump in second-quarter profit, and peers in developed markets are closing plants amid slower economies and lower prices.

In contrast, Chinese Premier Wen Jiabao is overseeing a $23 billion investment in new mills to stimulate automaking and housing to reignite growth that fell in the second quarter to the slowest in three years. The strategy already is sparking unfair-trade charges by Western rivals.

“Increased Chinese exports take sales directly away from American producers,” said Alan Price of Wiley Rein LLP, which acts as the trade attorney for Nucor, the largest U.S. steelmaker by market value. “It is highly likely that current Chinese exports across a range of products are being dumped.”

ArcelorMittal, the biggest producer, has shuttered or idled plants as demand waned, and Pittsburgh-based U.S. Steel sold its unprofitable Serbian division this year.

ArcelorMittal said sales in the second quarter dropped 10.5 percent to $22.5 billion from a year ago.

But ArcelorMittal is not concerned about Chinese exports to Europe, seeing Chinese production volumes matched by domestic demand, according to Aditya Mittal, the company’s chief financial officer.

Daily steel production in China rebounded to 2 million metric tons in June, the second highest after a record of 2.02 million tons was set in April.

Output, already more than twice the combined daily production in Japan, the United States, India and Russia, may climb 5.4 percent to 720 million tons this year, further outpacing domestic consumption, according to the median of three analysts surveyed by Bloomberg News.

“Chinese mills have to boost exports as they don’t have self-control on production,” said Xu Zhongbo, chief executive officer of Beijing Metal Consulting and a college professor in Beijing.

Reducing output would require idling plants and laying off workers, Xu said. “All those things would incur losses while competitors will come in and take up market share.”