India's biggest domestic iron ore producer, state-run NMDC Ltd, reduced prices for its most common grade by almost 6 percent a tonne in January, an unexpected move that will help cut the costs of steelmakers who rely on imports.
NMDC lowered prices for 65-percent-grade lumps by 5.8 percent from December to about $99 per tonne this month, said a source at the company who declined to be named because he was not authorised to talk to the media.
International prices for 62-percent-grade iron ore spiked 24 percent during December and are now around $144.90 per tonne.
"The economics are not supporting a price cut, but this could be done due to pressure from steel makers," said an analyst at a trading firm. The NMDC source did not say why the company had lowered prices.
India used to be the world's third-largest exporter of iron ore, but a government-led clampdown on illegal mining has cut domestic production and forced steel makers such as JSW Steel and Essar Steel to resort to expensive imports.
India imported about 9 million tonnes of iron ore from April to November, and that amount could rise to 15 million tonnes in the fiscal year which ends in March, according to the Federation of Indian Mineral Industries, an industry association.
Shares of NMDC, which produces about 15 percent of the iron ore mined in India, fell more than 1 percent after the price cut, while steel makers such as JSW Steel gained as much as 1.2 percent. The benchmark BSE index was up 0.13 percent by 0817 GMT.
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