UAE's Dubal keeps output steady, alters product mix

* Dubal says operating at full capacity * Supplier, traders say Dubal has cut back DUBAI, June 15 (Reuters) - The UAE's Dubai Aluminium Co (Dubal) said on Monday it had not cut output after a supplier and metal traders said the firm was purchasing less raw materials. "We are still operating at full capacity of 960,000 tonnes per year and have made no production cuts," a spokesman for government-run Dubal said. "We have just changed our product mix." He declined to give more details. A European alloy supplier to Dubal told Reuters that the Dubai-based company had reduced imports of some raw material by 30 percent since the beginning of the year. "We supply Dubal with alloys such as copper alloys which are used in making the final product but their purchasing has been down 30 percent so far," said Michael Terehov, General Manger of Demidov Industries, an alloys supplier based in Estonia. Terehov estimated Dubal's output of primary aluminium had fallen around 5 to 10 percent, while output of casing aluminium had fallen around 50 percent. Regional metal traders estimated Dubal's primary aluminium output was down around 10-15 percent. Dubal's sales dropped by 30 percent in the first quarter, as the global automotive industry took a hit from a slump in consumer demand due to the credit crisis, said Abdulla Kalban, chief executive of Dubal last month. ALUMINIUM PRICES Aluminium producers worldwide have taken about 15 percent of global capacity offline to match the recessionary demand. Many are now operating below break-even levels and industry analysts forecast deeper production cuts are needed to boost prices. "Prices still remain vulnerable to high stock levels and ideal capacity," said Massimo Rossi, a senior consultant at London-based CRU Group. "If more production cuts are implemented that would lift the price of the metal as consumption recovers." Aluminium prices fell more than 50 percent to a low of around $1,300 per tonne earlier this year from a peak in 2008 as the economic slowdown cut into demand. The price has since recovered to around $1,600 per tonne. Producers have adjusted their output, but Middle East producers have made only slim reductions, Rossi said. "All producers to a certain extent have adjusted their production levels, but the cuts in the Middle East are marginal compared to the West," he said. "In the Middle East production costs are low compared to other parts of the world, that is why producers can still afford to keep output at steady levels."