Aluminium producers switch sights to Far East markets
The UAE's two aluminium producers are boosting exports to the Far East and other emerging markets to offset disruptions to Middle East orders caused by unrest.
Both Dubai Aluminium (Dubal) and Emirates Aluminium (Emal) have suspended shipments to Syria, an important centre for re-export of the metal in the region.
As a result, the firms are directing more trade elsewhere.
"We always direct our orders to somewhere else," said Khalid Buhumaid, a spokesman for Dubal. "The Far East market is picking up, and one of the challenges for next year is exploring South America."
Dubal secures buyers on global markets of both Dubal and Emal's products. The two companies have strong links: Dubal is a 50-50 partner in Emal with Mubadala Development, a strategic investment company owned by the Abu Dhabi Government.
Instability in Syria has dented the value of the regional market, which accounts for 38 per cent of total exports for the two companies. Syria's Mediterranean port of Latakia allows aluminium to be shipped into the country via the Suez Canal.
It is then transported by road to neighbouring Lebanon, Iraq, and Jordan. But its re-export status has been threatened by heightened unrest in recent months.
"The Syrian market is dominated by us and is a hub for Jordan, Lebanon and Iraq," Mr Buhumaid said. "Syria is one of the most important markets for us, and before the crisis demand was increasing."
The instability may be hastening a trend by the producers to tap aluminium export markets farther afield.
Demand is growing particularly strongly in China and other Far East markets.
Lightweight and available in a variety of grades, the metal is used in everything from the construction industry to making vehicles, aircraft, cans and foil.
China is already the world's biggest producer and consumer of aluminium and demand is expected to rise 10 per cent this year as its economy booms.
Dubal and Emal are also turning their focus on South America, a continent with some fast-growing economies.
Opportunities abound in Brazil as the country upgrades its infrastructure in readiness to host the 2014 FIFA World Cup.
In 2009, Dubal teamed up with Vale, a Brazilian mining outfit, and Norsk Hydro, a Norwegian company, to develop an alumina refinery in Brazil.
"Recent history suggests that China tends to be more self-sufficient than South America in primary aluminium production, and South America does not have any plans to increase their capacity," said Chris Bayliss, the deputy secretary general and director of global projects at the International Aluminium Institute (IAI) in London.
Together, Emal and Dubal are capable of producing about 1.75 million tonnes of aluminium a year. Emal announced last month it was going ahead with a second phase of its smelter project worth US$4.5 billion (Dh16.52bn) to almost double its capacity to 1.3 million tonnes of annual production.
Aluminium production across the GCC reached 292,000 tonnes last month, the highest production this year, according to data from the IAI.
Published: August 28, 2011 04:00 AM