Residents were urged to close their doors and windows as smoke billowed from the scene in Pimhole Road.
Twenty fire engines were sent to flight the blaze, which covered a 30-metre-square area and reached 10 metres high in places.
Firefighters used a hydraulic platform to tackle the blaze from above as witnesses reported hearing explosions.
“Our crews are doing a great job prevent the fire from spending despite the challenging conditions they’re being faced with,” said group manager Val Hussain from Greater Manchester Fire and Rescue.
“As a matter of precaution I would urge everybody to stay away from the area and keep their windows and doors shut.”
The scrapyard is close to Pimhole Community Farm, which keeps chickens, alpacas, sheep and horses.
Local resident Michelle Boudin said: “I could see it from my bedroom window… it’s still burning now and I can hear the explosions from here.
““I would say my only concern is that it doesn’t spread to the farm which is very close to the yard.”
Justine Myers, 32, said: “It’s absolutely huge, the smoke is heavy, heavy black and the flames are higher than the three story building in front of it.”
Additional reporting by Press Association