“In the aluminium industry, the key event of the last ten years is the arrival of China as a world powerhouse ” Mr. Serge Roy, VP Marketing, Aluminium Valley Society

Mr. Serge Roy is an industrial expert with 30 years of experience in the aluminum industry in marketing and strategic planning with particular expertise in the carbon, casting centers, aluminum recycling area and R&D projects. At present the VP Marketing for Aluminium Valley Society, he interacted with AlCircle team during ARABAL Conference from 5th to 7th Nov 2013 at Abu Dhabi regarding the aluminium industry in general, the role of e-commerce and online media in the industry and about his new project.

Aluminium Valley Society is a network of nearly 100 companies located in the Saguenay area of Quebec, all dedicated to the aluminium industry, both upstream and downstream of the smelters. In particular, there is, in this region a very strong base of equipment suppliers who have built their expertise over more than 50 years of servicing regional smelters in Québec Canada.

AlCircle: Could you please tell us in brief about the project you are dealing with and the kind of services it offers?

Serge Roy: I worked almost thirty years for Alcan as a director in the area of business planning, strategic planning and marketing and as a consultant I offer services to the aluminium industry in these areas. As for Aluminium Valley Society is concerned, I am helping the equipment manufacturers in the Saguenay area of Quebec define their marketing strategy in the Middle East.

AlCircle: The general talk/ perception in the industry circle is that the aluminium sector is in general recession. How would you react to that?

Serge Roy: I completely agree with the statement that the industry is in recession that started mid 2008. It is likely to continue like this for some more time considering the high inventory situation in the LME. However, I am positive about the future because demand will eventually outstrip supply, inventories will start to decline and prices will come back up. The aluminum industry is very cyclical, so this is nothing new, except maybe the length of the downturn which is longer than usual. Also unusual is the very small number of smelter projects being planned right now. In my 30 years in the industry the only other period similar to today happened when Russia started exporting 4 million tones of aluminum to the West almost overnight in the early 90’s. When aluminum prices come back up the supply response is therefore likely to be very slow which should be very positive for prices.

AlCircle: When do you think the turnaround in the market is likely to happen?

Serge Roy: I think, a year roughly from now we should start to see some more positive signs. LME price should therefore start improving at the end of 2014 or the beginning of 2015. This being said, please do not forget that forecasting aluminum prices is a very difficult art and in the past I have been wrong as often as right.

AlCircle: Which geographic regions or countries do you think would assist in overcoming the current recessionary trend?

Serge Roy: In the aluminium industry, the key event of the last ten years is the arrival of China as a world powerhouse. China now accounts for almost half of the world production and the consumption of aluminium from virtually nothing in the early 1990. What is happening in China is very important for the industry. Next in line is the US. They have come through a very difficult time, in the housing sector in particular, with the consumption of aluminium coming down significantly. But there is a good likelihood that it will bounce back strongly from a very low base. The US also tends to recover faster than rest of the Western world. Europe is usually very slow on the way down but very fast as well on the way up.

AlCircle: Which industrial sector (automotive, construction, transport, packaging electrical etc.) do you think has the potential to boost the demand for aluminium?

Serge Roy: Well, I think, the first one is the housing sector, not necessarily because there are new applications, in fact aluminium has lost out a significant share in this sector. But, it was so much down that once it comes back; it will give significant boost to the aluminium industry. The next is of course the electrical industry. All the developing countries need to expand their electrical network, India being a good example of that. Third one is definitely automotive where aluminium is slowly but surely gaining ground and improving its market share. It is a slow process. I remember when I started in Alcan in 1985, there was a lot of buzz about lightweighting and fully aluminium cars and it’s almost 30 years and it is yet to come. But eventually it will be.

AlCircle: Do you think that as an online media Alcircle has an advantage over visual or print media in promoting your products and services?

Serge Roy: Online media is spreading and that is a good sign. In the aluminium industry, it is not necessarily that easy to get access to the kind of information you are providing. It is good that portal like AlCircle is providing timely information to the aluminium industry and the people who are working for it.

As for advantage over print India, I think eventually yes. The future is really online and it will slowly take the better of typical print media.

AlCircle: As E-Commerce has caught on in a big way in the consumer sector; do you think e-commerce can help out the aluminium industry business in overcoming these difficult times?

Serge Roy: E-commerce is really booming in the consumer sector. However, when it comes to buy a million tons of aluminium, alumina or coke, I still feel that you have to meet the supplier face to face. For the main inputs of the industry, e-commerce cannot therefore not really substitute direct dealings.

AlCircle: How has been your experience of attending ARABAL 2013?

Serge Roy: Let me start by saying that the Middle East has really grown into being a powerhouse in the aluminium industry. I am coming from an area in Canada which used to be number one in production, but has now become a distant number two to the Middle East. If you want to expand your business with the primary smelters you therefore have to come to this part of the world. The Middle East smelters are open to overseas contractors and people selling their technical experience and knowledge. This is why we think that ARABAL is the perfect platform for initiating that.

AlCircle: What is your take on the present warehouse issues in the aluminium industry? What according to you is the reason behind low LME price and high premiums paid for the physical metal?

Serge Roy: I think the low aluminium price is simply a reflection of the fact that there are too much inventory and that producers have not done enough to cut production. As for the current warehouse issues, I think it will become a bigger issue in the coming months as more and more inventory needs to be released from the warehouse. I think we need to speed up the process to release the metal to buyers to avoid the high premiums paid for the physical metal. Some people have vested interest in stocking the metal in the warehouse for long which is not healthy for the industry.

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