The firm admitted releasing a quantity of benzole, exposing five workers to risk of death from flammable vapours coming off it, in June 2011.
A Health and Safety Executive (HSE) investigation showed it failed to take appropriate safety measures.
Tata Steel was fined £930,000 and ordered to pay costs of £70,000, at a hearing at Hull Crown Court.
At a previous hearing, the company pleaded guilty to breaching the Health and Safety at Work Act 1974.
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The HSE said two of the workers involved in the incident were exposed to the chemical and suffered coughing and breathing difficulties. They were sent to hospital and discharged the next day.
It said the release of benzole could have caused serious injury or death had it been ignited.
HSE inspector Stephen Hargreaves said: "It was extremely fortunate no one was seriously affected by this incident. Had the flammable vapour cloud ignited this could have resulted in multiple fatalities.
"This incident highlights the need for all duty holders to implement and address all concerns and potential risks which have been identified.
"Tata's failure to do so in this case put a number of workers at risk of serious harm."
Tata Steel has been ordered to pay £1m after it exposed five people to toxic substances at Scunthorpe Steel Works.