People living in the centre of Leeds reported hearing a number of loud explosions as smoke and flames dominated the city's skyline for a number of hours.
Residents in the Albion Way area were asked to keep their windows and doors closed as 15 fire crews from across West Yorkshire continue to fight the flames.
A fire service spokesman said the blaze was surrounded but a collapsed building was making firefighting efforts technically difficult.
The fire at Tradpak Recycling spread to two other buildings but crews managed to save four other businesses on the industrial estate, officers said.
Area manager Ian Dunkley, from West Yorkshire Fire and Rescue, told Sky News: "It's been a really big job. We've had approximately 100 firefighters on scene - 15 firefighting appliances, two aerial platforms, a high volume pumps and various support appliances."
Mr Dunkley said: "When the initial crews arrived at just after two o'clock this morning, the fire was well developed and there was a series of large explosions where LPG cylinders were involved in the fire.
He said it was too early to say what caused the blaze.