Large flames could be seen from the site after the blast in the city of Zibo. Nine people are reported injured.
The People’s Daily said a warehouse at the Runxing chemical plant exploded. There is a residential area about 1km from the plant.
Earlier this month blasts involving chemicals in the northern city of Tianjin killed at least 121 people.
Hundreds were injured there and 54 remain missing.
The proximity of industrial and chemical plants to residential areas has become hugely controversial.
Saturday’s blast took place near the city of Zibo, the South China Morning Post reported, quoting a villager who said that he saw a huge fireball and then heard two explosions.
The paper said that the fire had been brought under control by late on Saturday night.
It is not yet clear if homes in the area have been damaged.
The explosion triggered a fire and a dozen fire engines were at the scene, Xinhua news agency reports.
Howard Zhang of BBC Chinese says that the blasts at Shandong and Tianjin have taken on a political significance and threaten to overshadow China’s celebrations of the 70th anniversary of its victory over Japan in World War Two.
The Beijing Times reported that the Runxing plant contained adiponitrile – a chemical which is reported to be used for the production of nylon and can be harmful to skin.
Windows shattered at the scene of the blast, state media reported, and its vibration could be felt 2km from the site.
The operators of the Tianjin site are being investigated for allowing dangerous chemicals to be stored too close to homes.
How safe is Tianjin after blasts?
The questions after Tianjin
The blasts there also raised fears of contamination by toxic substances.
They also sparked a nationwide directive cracking down on the storage of chemicals.
Officially the minimum distance between businesses with dangerous chemicals and public buildings and transport networks is meant to be 1km.
But data from the Tianjin incident showed there were at least three major residential communities inside that distance from the warehouse.