A total of 17 fire trucks battled the flames during the night and contained the blaze about 1.10am.

"We believe we’ve got paint drums inside that were part of many explosions we’ve heard throughout the night," Superintendent Lance Duncan told media at the scene.

Police Inspector Daniel Bragg told reporters paint cans were "shooting through the air onto the footpath" as the fire raged.

Albion resident Lou said she woke up to the sound of fireworks and the echo of fire engines.

"To my horror, I rolled up my blinds to see a huge bonfire in the local industrial area where some of my favourite cafes and businesses are located. A real-life nightmare," she wrote on Instagram.

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Fellow witness Ange Matthews said she thought there were gunshots.

"Just explosions, constantly, I thought it was fireworks at first, but then I thought it was gunshots and then realised it was something completely different, it was insane," she told Nine News.

Snapchat users in Newstead, more than three kilometres away, posted videos of the fire as they watched from their homes on Thursday night.

Water and air quality tests were carried out and fire service inspectors gave the all-clear from any potential toxic contamination.

Paramedics were called, but did not treat anyone and instead remained on standby for firefighters.