The fire has led to the closure of most of the town's schools, and a rest centre being opened for evacuated residents.
Fire crews are now working to reduce the cordon so people can start returning home.
Corporate communications manager at Hereford & Worcester Fire and Rescue Service, Richard Prime, said this morning there were now four fire engines on site, along with around 30 firefighters. At the height of the fire there were more than 100 firefighters in action.
He said: "The incident is being scaled down. We have four fire engines on site plus an aerial ladder platform and incident command unit.
"The fire investigation remains ongoing. Efforts are being made to reduce the cordon so people can go back to their homes and businesses.
"There are still one or two pockets of fire, it's not fully out yet."
Residents in Park Street, between Plimsoll Street and Castle Road end, can return home for belongings but will be escorted once on scene. Anyone living in Wood Street can now return home, but Parkwood Court is still not accessible.
Meanwhile a number of Kidderminster schools have been closed to pupils as a result of advice from the fire service.
Schools that were closed on Thursday included Baxter College, Birchen Coppice Academy, Cookley Sebright Primary School, Foley Park Community Primary School, Franche Community Primary School, Heronswood Primary School, Holy Trinity Free School, King Charles I School & Sixth Form Centre, Offmore Primary School, St Ambrose's Catholic, St Catherine's CE Primary School, St George's CofE School, St John's CE Primary School,St Mary's CE Primary School, St Oswald's CE Primary School, Sutton Park Community Primary School, Wolverley CE Secondary School, Wolverley Sebright Primary School and Wyre Forest School.
People in areas affected by smoke from the fire should stay indoors, keep doors and windows closed. Motorists should keep windows closed, turn off air con and keep air vents closed.
Workers in neighbouring buildings to where the blaze broke out talked about their shock as buildings began to shake and flames erupted from a chemical factory in Park Street.
The blaze broke out shortly before 3pm yesterday and people were evacuated from nearby buildings as the several explosions occurred at Betts Metals.
Aron Jacques, the 32-year-old manager of ATS Euromaster Kidderminster, talked of how he and two other colleagues had literally "run for their lives" as the building was shaken by several explosions.
He said: "The base at Kidderminster is closed today and we are working from Worcester. We just do not know what has actually happened to the building yet.
"It is all a bit of blur about what happened. There was loads of smoke and the building we were in which was next door began shaking.
"There were flames coming through the roof next door and the three of us just ran for our lives to the Spa shop down the street.
"I knew there was dangerous stuff in the building where the explosions were occurring and we just ran for our lives."
Lisa Pryce, aged 53, who lives nearby, said: "I am just relieved that we still have our house.
"I was out walking the dog at Dunley and we could see the smoke from ten miles away.
"A friend messaged me and asked if I knew what was going on down my street.
"He sent me a picture of the smoke.
"It is only because the wind was in the opposite direction that the fire did not spread to our side and take out the houses along Park Street.
"There were drums of flammable liquids and I understand that a spark might have caused the fire.
"Some two thirds of people living in Park Street and from the flats by ATS were evacuated.
"I have lived here a long time and believe that this was an accident waiting to happen.
"I did not want to go back to my house and instead spent the night at my daughter's at Clifton-on-Teme."
Joanne Edwards, a 48-year-old sales and administrator for Davis Memorials, with a base in Park Street, only yards from where the fire started, described today her horror on realising what was happening after hearing strange booming sounds.
The mother-of-two said: "Our building is within yards of the fire.
"I get leisure time and was doing some water-colour painting when I heard these strange noises, kind of like booming metal.
"I called Philip Craddock, the piano restorer who uses the workshop which is part of our building, and told him I thought something strange was happening. We opened the door and there was billowing smoke and flames coming from nearby.
"I was very scared and we panicked and locked up but realised we had left a lot of things behind and quickly went back and got some items but left most our stuff behind.
"The guys from ATS looked shocked and shaken by the experience.
"I had never seen anything like it and the smoke was billowing out and it really was quite scary.
"The fire crews arrived quickly and there were people in the flats opposite who were evacuated. The explosions sounded like loud booming and seemed to echo from other buildings.
"The smoke was so acrid and I have never seen smoke like it. I have never known anything like it and it was just like a huge towering inferno of a fire.
"We feel very fortunate as our building is untouched by the fire but it is temporarily closed and we are currently working from our Old Hill base."