A senior Chinese industry official has warned major iron ore producers that huge price hikes are likely to damage China's steel market and relations between iron ore and steel producers.

China's steel mills were under "great pressure" from soaring iron ore prices, which were expected to erode profits, said Zhu Hongren, chief engineer with the Ministry of Industry and Information Technology (MIIT) Thursday.

Zhu said at a press conference that price hikes in iron ore would lift costs for Chinese steel makers and dampen their profitability, given their heavy reliance on iron ore imports.

In the first two months of this year, profits of China' steel makers accounted for about 3 percent of their total revenue, compared with 2.9 percent in 2009 and 4 to 5 percent in 2008.

China, the world's largest iron ore consumer, imported 155.03 million tonnes of iron ore in the first quarter, up 18 percent year on year.