The Arkema chemical plant in Crosby lost power and its ability to refrigerate chemical compounds that need to be kept cool to remain stable after 40in (102cm) of rainfall in the area flooded the site.
A statement from the company warned that any fire at the chemical plant would be explosive and intense, and would produce black smoke that could irritate the eyes, skin and lungs of those who come into contact with it.
Homes within a 1.5 mile radius of the Arkema plant have been evacuated.
The chemical plant was shut down before Harvey made landfall last week.
But an explosion and intense fire are expected as the plant is surrounded by six feet of water, meaning chemical compounds – which must be stored at low temperatures – will warm up.
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Donald Jones, a meteorologist at the National Weather Service in Lake Charles, Louisiana, told Reuters: “We aren’t going to be dealing with it for too much longer.
“It’s going to pick up the pace and get out of here.”
Hurricane Harvey, which was later downgraded to a tropical storm, was so far killed 31 people as it swept across southern America.
The US National Weather Service downgraded the former hurricane to a tropical storm but has forecast continuing heavy rainfall over eastern Texas and western Louisiana.
Five days of torrential rain has submerged Houston, America’s fourth-largest city, while three flood defences – one of which is designed to withstand a ‘1,000-year flood’ – have overflown.
Hurricane Harvey hit Texas on Friday as a powerful category 4 hurricane, leading to devastating floods in Houston and other areas along the Gulf Coast.
Houston, America’s fourth-most populous city, has been paralysed by the conditions and rebuilding and re-establishing the area is expected to take years and cost billions of dollars.