The fire started at South Wales Wood Recycling in Heol Llan, Coity, just before 03:30 BST on Monday.
Firefighters from Pencoed and Bridgend have isolated the burning material and they will resume work on Tuesday.
South Wales Wood Recycling said they were working around the clock to help stop the blaze.
In a statement the company said the blaze had affected an estimated 1,000-2,000 tonnes of recycled wood chip.
The cause of the fire is not yet know, but the company said the "circumstances were suspicious".
Natural Resources Wales officials are also at the scene in case of any environmental impact.

Hillingdon Council's leader said it would provide funding to challenge it for "however long it takes to win this battle".
Wandsworth, Richmond and Hillingdon councils spent £300,000 from their general funds on legal action.
Windsor and Maidenhead Council spent £50,000 from its development fund.
The details were obtained using Freedom of Information laws.
Council general funds are where money for most council services is drawn, with funds raised from council tax and central government grants.
The four councils failed in an attempt to challenge the decision to build the runway at the High Court in January.
London Councils, the body that represents London local authorities, says that by 2020 there will be a budget gap of around £2bn in London local government, which council budgets will have to accommodate.
Hillingdon Council has set aside a contingency budget of £200,000 for possible future legal action against the third runway, while Wandsworth has budgeted £25,000.
The case against the runway brought by the councils was struck out by Mr Justice Cranston in January on the basis that the court had no jurisdiction to hear the claim, but further legal action against the runway may take place.
John O'Connell, chief executive of the TaxPayers' Alliance, questioned whether the councils were making the right spending decisions.
"Those are huge sums of taxpayers' money spent on legal fees which could have otherwise gone towards road maintenance or adult social care," he said.
"Given that Hillingdon residents have seen their council tax rise by over 45% in real terms over the last 20 years, the decision to allocate so much money for further action raises serious questions over the council's priorities.
"Many residents may well oppose the third runway, but they are free to form groups to launch legal action themselves."
Stan Woods, a resident of Longford, which will be demolished to make room for the third runway, feels there is little the councils can do to affect the outcome.
"I worked at Heathrow for 38 years, so can see the reason for expansion, but equally wish I could keep my home," he said.
"I guess the councils feel they are acting on behalf of their communities, but to be honest this decision will be taken higher up the political ladder."
Councillor Raymond Puddifoot, leader of Hillingdon Council, said it was time the government stopped "wasting time and money" and turned its attention to finding a "workable alternative" to Heathrow.
"The government spent more than £3.8 million of taxpayers' money on the expansion of Heathrow Airport in the 18 months between July 2015 and December 2016, and this figure has risen dramatically over the last few months and will continue to do so," he said.
"We will continue provide both the funding and the integrity necessary to both defend and represent our residents for however long it takes to win this battle."

The original game was postponed on 26 November because of a frozen pitch.
The offer from the Latics is for both home and away supporters visiting SportsDirect.com Park.
Oldham, who are next to bottom of the table, three points from safety, have just exited a transfer embargo and reappointed John Sheridan as manager.
"We want as many supporters to welcome back the manager to the football club as he takes his place on the sidelines for the first time," said a club statement.
Supporters are, however, being invited to make a donation to a local charity.
Brentford were the first team to offer free entry for a league game in England when they played Peterborough in 2001.
Firefighters have been battling a blaze at a recycling business in Bridgend after about 2,000 tonnes of wood chips set on fire.
[NEXT_CONCEPT]
Four councils under Heathrow Airport's flight path spent £350,000 on legal fees challenging the planned third runway, the BBC has learnt.
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Oldham Athletic have offered free entry to all fans for their rearranged League One fixture against Peterborough United on Tuesday, 24 January.