The Arkema Inc. plant at Crosby was unable to refrigerate chemical compounds which must be kept cool.
Black smoke was seen billowing out of the plant.
The storm has led to 33 deaths in its wake and left most of Houston underwater.
Explosions reported at plant hit by Hurricane Harvey
Why did the explosions take place?
Production at the plant halted on Friday before the storm hit.
The site was flooded after receiving 40-inches of rainfall, causing power cuts.
The plant, whose backup generators were flooded, manufactures organic peroxides which at high temperatures can be dangerous.
The plant's smoke would irritate skin, eyes, and lungs. Residents in a 2.4-km radius around the plant have been evacuated.
Company says fire must burn itself out
"Organic peroxides are extremely flammable and, as agreed with public officials, the best course of action is to let the fire burn itself out," Arkema said. The company has advised residents living in the evacuation zone not to return for the time being.
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At least 32,000 people displaced from Hurricane Harvey
Parts of Texas have received over 50-inches of rainfall since Hurricane Harvey made landfall on August 25.
The hurricane was weakened to a tropical storm and subsequently, to a tropical depression.
Rescue efforts across affected areas have been ongoing. An estimated 32,000 people are living in emergency shelters.
Thousands of homes were destroyed and large parts of Houston, America's fourth largest city, remain underwater.
Texas Governor warns "the worst is not yet over"
Harvey was the most powerful Hurricane to hit Texas in over five decades.
Texas Governor Greg Abbott said the state would need federal assistance worth over $125 billion to recover.
Abbott warned "the worst is not yet over," because flooding would likely continue for several days.
Around 24,000 members of the National Guard are being deployed in Texas to aid rescue efforts.