A fire is raging at a metal recycling plant in Palmerston North.

Fire crews were called to Molten Metals in Kelvin Grove Road just before 4am after getting reports of cars on fire.

Fire and Emergency shift manager Chris Dalton says the building was well alight when firefighters arrived.

He says reinforcements have been called in.

"It gives us nine fire appliances and a command unit and couple of support vehicles there. It was quite close to a neighbouring building so the crews have been working hard to stop the spread of fire."

Police are assisting and have asked the public to stay away from the blaze which is near the city's airport.

Cordons are in place and traffic is being diverted, police said.

Local resident Chris Lamb heard loud pops from the fire, which sounded like gunshots, then went outside and saw a large cloud of smoke.

He drove down to investigate.

"And there were a whole lot of residents, and then looking through it was just an inferno of presumably tyres and cars burning up."