Chinese steel exports are surging against the backdrop of record production and waning demand in China, resuming a trend that may set the stage for a resumption of trade disputes with the U.S.

The countries' steel-trade relationship soured in November 2009 when the U.S. issued punitive tariffs to stop a wave of Chinese oil-well tubes.

China's steel exports have resumed climbing in recent months, escalating tensions with the U.S. Last month, exports surged to their highest level since June 2010 to reach 5.23 million metric tons, China customs data showed.

"The West is increasingly at risk from Chinese overproduction as steelmakers continue to cut export prices in an attempt to use the export market as a 'supply relief valve' to reduce pricing pressure at home," Chicago-based Steel Market Intelligence said Tuesday.

China's tactics will further pressure global prices as global demand slows during the summer, it said.

China's customs data showed that net steel-product exports last month also reached a two-year high.

The U.S. International Trade Commission on May 30 voted to back retaliatory duties on high-pressure steel cylinders from China, after exports surged to $81.7 million last year from $49 million in 2010. The U.S. Commerce Department has announced plans to impose antidumping duties of up to 31.21% on the cylinders. Also in May, China sought to challenge U.S. countervailing duty measures against 22 goods, including steel products, at the World Trade Organization.

Chinese analysts played down the likelihood of steel exports aggravating the bilateral trade relationship, attributing the upward blip to a stronger dollar.

"The weak domestic market is a key reason for the export surge... though exports may also have risen over a short term due to the rising U.S. dollar, which is not expected to last," Lange Steel analyst Lu Huaying said.

The dollar rose more than 6% against the euro in May, though it has ebbed marginally since.

Lange data showed that while global steel prices in May fell about 1.9%, Chinese steel prices fell by a far wider margin of around 4% on month.

Mills have revved up production even as domestic demand and prices fell this year, with crude steel production ebbing only slightly in May, from record levels in April.

Bellwether Baoshan Iron and Steel Co. 600019.SH +0.45%cut July prices on Monday, its first reduction this year, following reductions of about $13-$30 a ton by other major mills in June.