Dubai Aluminium (Dubal) yesterday said it would not cut production despite a drop in sales by almost 30 per cent. Sales during the second quarter are expected to fall further by another 20 per cent.

Abdulla Kalban, CEO of Dubal, speaking on the sidelines of 14th World Aluminium Conference organised by CRU, said high global inventories are putting pressure on sales.

"Worldwide inventories have increased to four million tonnes and that is putting pressure on our sales. We have seen a drop of 30 per cent in our sales during the first quarter of this year and we are expecting lower sales during the second quarter as well," he said.

Dubal currently has an annual production capacity of 960,000 tonnes and Kalban said the target would be met. "Both, the construction sector and the automotive industry, to whom we are major suppliers, are affected by the slowdown. There are many projects that have been delayed, resulting in a sharp decline in demand," he said.

Aluminium prices have fallen 48 per cent in the past year, and traded as low as $1,279 (Dh4,698) a tonne on February 24 in London. Aluminium traded at $1,524 a tonne on the LME yesterday, down by more than half from the July 2008 peak of $3,380 a metric tonne, according to agencies.

Walid Al Attar, Dubal's Vice-President of Marketing and Sales, said smelters in the region stand to benefit, compared to those elsewhere because of low energy cost. Except for the recent drop, sales figures so far this decade have been exceptionally well. Dubal's sales grew from 68,000 tonnes (2000) to 240,000 tonnes (2008) while customer base almost trebled during the same period, he said.

Meanwhile, pressure on prices has also continued to affect production levels at various smelters. High energy costs at smelters operated outside the region has forced many of them to either cut production or in some instances to the extent of closing down operations.

In April, Hydro Aluminium, the German unit of Norway's Norsk Hydro, said it may stop production at its loss-making smelter at Neuss in Germany, according to agencies. On Sunday, Oman's Sohar Aluminium, part-owned by Rio Tinto, said it has put the second phase of its plant on hold.

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