MUMBAI: Tea prices in India, the world's second biggest producer, dropped at last week's auction after supplies rose significantly, though demand was good from local and overseas buyers, dealers and industry officials said on Monday.

The price of CTC (crush-tear-curl) tea was 164.43 rupees ($2.94) per kg, compared with 171.36 rupees at the previous weekly auction. Dust tea price eased 6.2 percent to 170.76 rupees per kg.

"Supplies improved significantly from tea gardens in north-east. That was the main reason behind lower prices. On the demand front, there is no slowdown. Domestic buyers are active," said a member of Calcutta Tea Trader's Association.

Usually, monthly tea output in India is lower from December to April and starts recovering from May.

India's tea production in March dropped 16 percent from a year ago to 47.6 million kilograms, the state-run Tea Board said, as unfavourable weather in top producing north-eastern Assam state hampered plucking.

India exports CTC tea mainly to Egypt, Pakistan and the UK, and the premium orthodox variety to Iraq, Iran and Russia.

Tea prices in Bangladesh rose for a fourth straight week at an auction on June 12, on strong demand from buyers and despite higher volumes on offer. AGENCIES