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UPDATE 1-India's NMDC cuts Oct iron ore prices by 2-11 pct

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MUMBAI, Oct 9 (Reuters) - India's National MineralDevelopment Corp has cut iron ore prices by 2-11percent for October from September, catering to steelmakers whoface domestic shortages of the key ingredient and have had toturn to expensive imports.

India's steel imports have soared in recent months asdomestic output growth slowed because of lack of raw materials,while demand continues to outpace supply.

"There was a demand from domestic steel manufacturers toreduce prices, so this was done to support them," a source atthe country's biggest iron ore miner said on condition ofanonymity.

Steelmakers including JSW Steel and Essar Steelface challenges in obtaining iron ore, an important steel makingingredient, because domestic production has been reduced bymining bans in key iron ore producing states like Karnataka andGoa. That has forced them to turn to expensive imports.

"It is a good move and will directly benefit local steelmakers like JSW Steel and Kalyani Steel ... it will lower theircosts," said Basant Poddar, vice president of the Federation ofIndian Minerals Industries.

State-run NMDC, which accounts for about 15 percent of ironore mined in India, has over 40 percent of the market.

Private miner Sesa Goa also saw iron ore salesfall, by 86 percent to 0.2 million tonnes in the second quarter,due to a ban on mining operations and transportation in westernGoa state.

(Reporting by Siddesh Mayenkar; Editing by Jo Winterbottom andKen Wills)

((siddesh.mayenkar@thomsonreuters.com)(+91-22-61807163)(Reuters

Messaging: siddesh.mayenkar.thomsonreuters.com@reuters.net))

Keywords: INDIA NMDC/