THE European steel industry has warned that the hefty price increases mining companies are seeking for iron ore could slow the region's economic recovery or even tip it back into recession.

European steelmakers are bracing for a large year-on-year jump in the price of iron ore, a key ingredient in steelmaking. Industry group Eurofer said miners are demanding an 80 per cent to 90 per cent hike in annual contract prices.

"Increases of this magnitude will have a significant impact on steel prices and as such on the whole manufacturing and construction value chain and ultimately on the European consumer," Eurofer said in a statement.