It's not an actual word, which means there's no established etymology. That said, what you're probably seeing is some 19th century latinate slang—they just loved talking uppity latinate nonsense—that someone put into a dictionary as a lark and has since been unthinkingly copied by subsequent volumes. In any case, you can see at Google Books that the only real 'use' it has is in collections of odd old words.
It's presumably based on the Greek κατάρα ("a curse", "cursing"¹) that shows up a few times in the Bible, plus the medical suffix -lysis from Greek λύσις ("a loosening", "an emptying"). There's no actual connection with steam, whose constant inclusion seems to underline that the word lists including it are just copying one another.
¹Strong more specifically glosses it as "what has 'to go down' due to condemnation, i.e. the penalty-curse that results when God Himself curses... something."