A massive chain-reaction explosion at a Mexican fireworks market, where witnesses say “everything was catching fire”, has killed 31 people and injured 72 more, according to local officials.

The market – on the northern outskirts of Mexico City – was decimated by the explosion which was sensationally caught on video.

Twelve people remain missing as forensic investigators continue to examine the charred remains of the markets.

Investigators are studying burnt human remains at the site but are not sure if they belong to individuals already confirmed dead.

Footage of the incident showed a flurry of multicoloured pyrotechnics exploding into the early afternoon sky as a giant plume of smoke rose above the market. Fireworks detonated in a peal of clattering bursts reminiscent of a war zone.

It was the third time in just over a decade that explosions have hit the popular San Pablito market in Tultepec. The detonations struck in the run-up to the busy Christmas holiday, when many Mexicans stock up on fireworks.

La explosión en @eTultepec / @LaRazon_mx @TraficoReporte @webcamsdemexico @franciscozea @lopezdoriga @ApoyoVial pic.twitter.com/uudTfRWnX0

— Carlos Jiménez (@c4jimenez) December 21, 2016

https://vimeo.com/196509749

Thirteen children suffered burns to over 90 per cent of their bodies and were being sent to the US city of Galveston in Texas for treatment, Governor of the State of Mexico Eruviel Avila said.

Mr Avila pledged to punish those responsible for the incredible incident and provide economic assistance to those stall owners who had lost their livelihoods.

Over 80 per cent of the market’s 300 stalls were destroyed and local media reported there was a whopping 300 tonnes of fireworks in the market at the time of the blast.

There are also fears the death toll could rise above 31, given the number of people injured.

‘Everything was catching fire’

Crescencia Francisco Garcia said she was in the middle of the grid of stalls along with a few hundred others when the explosions began.

She froze, reflexively looked up at the sky and then took off running through the smoke once she realised everyone was doing so.

“Everything was catching fire. Everything was exploding,” she said.

“The stones were flying, pieces of brick, everything was flying.”

A drone image of smoke billowing from the San Pablito Market. Photo: AAP

Cesar Ornelas of Atizapan de Zaragoza was only 10 minutes into shopping with his son and his father when he heard the first explosions.

He tried to run, but something knocked him to the ground from behind.

He tried several times to get up, unsuccessfully, and ultimately his 15-year-old son Francisco had to drag him out.

“We didn’t look back,” said Mr Ornelas, who suffered light burns and a large bruise over his left kidney.

“We heard how the explosion was kind of going off bit by bit.”

Nearly four hours later, he and Francisco limped gingerly out of the market area.

Francisco said paramedics told him his leg was likely fractured by flying debris and he does not know where his father is.

The death toll could well rise from the current 29. Photo: Getty

“My condolences to the families of those who lost their lives in this accident and my wishes for a quick recovery for the injured,” President Enrique Pena Nieto said via Twitter.

The scene remained dangerous and people have been told not to come within 5 kilometres to avoid hampering the emergency response.

A fire engulfed the same market in 2005, touching off a chain of explosions that levelled hundreds of stalls just ahead of Mexico’s Independence Day.

A similar fire at the San Pablito Market also destroyed hundreds of stands in September 2006.

Many in Mexico traditionally celebrate holidays — including Christmas and New Year’s — by setting off noisy firecrackers and rockets.

– with ABC