* Price of most common grades cut by 6 pct
* Move may help lower costs of steelmakers
* India iron ore output hit by govt clampdown
(Adds details, quotes)
By Siddesh Mayenkar
MUMBAI, Jan 3 (Reuters) - NMDC Ltd, India's biggest iron ore producer, has cut the price for its most common grade by almost 6 percent in January, company sources said, an unexpected move that will help lower the costs of steelmakers.
India used to be the world's third-largest exporter of iron ore, but a government-led clamp down on illegal mining has cut domestic production, forcing steel makers such as JSW Steel and Essar Steel to resort to expensive imports.
State-run NMDC this month cut prices for 65-percent-grade lumps by 5.8 percent to about $99 per tonne, said a source at the company.
"Since there was a decrease in domestic iron ore prices in November, we've adjusted to the price fall," said another company source. Both sources declined to be named as they are not authorised to speak to media.
NMDC benchmarks its prices to weighted average rates for the previous two months offered by a number of local sellers, including Rungta Mines and Essel Mining, based in India's biggest iron ore producing Odisha state.
An analyst said the pressure from local steelmakers, who have complained of high prices, could have triggered the cut.
"The economics are not supporting a price cut, but this could be done due to pressure from steel makers," said the analyst at a trading firm, who also declined to be named.
India imported about 9 million tonnes of iron ore between April and November. Imports for the fiscal year ending in March could total 15 million tonnes, industry body Federation of Indian Mineral Industries estimates.
In the international market, 62-percent-grade iron ore is selling at about $144.90 per tonne, after a 24 percent price rise in December.
Shares of NMDC, which produces about 15 percent of the iron ore mined in India, fell more than 3 percent after the price cut, while steel makers such as JSW Steel gained as much as 1.2 percent. The benchmark BSE index ended up 0.26 percent.
Separately, JSW Steel, India's No. 3 steelmaker, said it would raise prices by about 2 percent, or 750 rupees a tonne, effective Thursday to account for an increase in raw material costs and higher global prices.
"We haven't increased steel prices in last three months whereas input costs and steel prices in international market have gone up significantly," a JSW Steel spokesperson said.