Australia Weather News

A tornado has been observed in central New South Wales, with a severe weather warning issued for the area.

The Bureau of Meteorology (BOM) confirmed the tornado occurred north west of Young at about 3:30pm.

The State Emergency Service also issued a watch and act alert and asked people to stay indoors in those areas.

The tornado warning has since been cancelled, but the BOM said severe weather was still likely and that there was a risk of hail, damaging winds and heavy rain.

NSW RFS inspector James Morris said the tornado was spotted at about 3:30pm.

"The Rural Fire Service fire tower cameras picked up what was believed to be a very significant weather cell building to the north-west of Young, around [an area] called Tubbul," he said.

"That camera picked up the cell, which was then sent through directly to our fire behaviour analyst team through to the Bureau of Meteorology, which we believe provided notification and warning of what we believe would be a tornado cell forming in in that area."

Mr Morris was unable to confirm how long the tornado lasted, but said the early indications were that it was not very destructive.

"At this stage, there's no reports of any injuries or significant damage," he said.

"However, given that that cell is still moving through the area, we will hopefully see … whether emergency services do receive any further calls for assistance."

Explosion at steelworks

Meanwhile the wet weather is being blamed for a loud explosion at the Port Kembla Steelworks.

BlueScope Steel said the weather conditions caused a reaction at the basic oxygen steelmaking plant slag-pit and created a steam explosion at about 4pm. 

The noise of the explosion was heard by residents in suburbs up to 20 kilometres away.

Residents closer to the blast told the ABC they felt their windows shake.

BlueScope Steel confirmed no-one was injured and that there was no significant damage to equipment.

No evacuations were necessary, the steelmaker said.

BlueScope will launch an investigation into the incident.