Chemical and Allied Industries in Serbia
• Industry • South-East European INDUSTRIAL Мarket - issue 2/2006
Association of Chemists and Chemical Engineers of Serbia
For the current state of Chemical and Allied Industries in Serbia we could say that аlmost all more important chemical companies in Serbia have already entered the process of privatization (achieved by merging firms at tenders or auctions) or into the process of restructuring (which will also end with privatization). Some of them have already been bought by foreign companies or local managers. The change of property structure should be a real driving force regarding future development of domestic chemical industry. Serbian chemical industry is probably a “small player” at World or European scale but should be considered as “a very important player” in the region of South-East Europe.
History of Serbian Chemical Industry
The most successful period for chemical industry, as well as for the complete industry of Serbia, were the 1970’s. Concerning effects of erected manufacturing facilities, the most favorable times were the 1980’s, when chemical industry and rubber industry of Serbia had 6 to 8 thousand of various products in their production programs and global production volume at the level of 8-10 million tpy. Record volume of production chemical industry achieved in 1989 and rubber industry in the middle of the 1980’s. In the year 1989 a record was reached in employment, which equaled about 63,000 in chemical industry and 20,000 in rubber industry, and also in share of chemical industry and rubber industry in gross domestic product of industry, which was 10.6%.
The political and economical changes in all former socialist countries, including Serbia, as well as the sanctions of the UN and the war resulted in serious consequences for Serbian chemical and rubber companies. After the disintegration of the country, Serbia was left without a large number of products that had been provided on the domestic market. The important ones are products from the group of polymers such as PS, PET, ABS, a part of the assortment of chemical fibers and a significant number of base organic products (especially aromatics) and their derivatives, especially those from the group of fine or special chemicals.
In the field of inorganic chemicals Serbia was left without domestic offer of soda ash, calcium carbide, carbon black, titanium dioxide, sodium perborate, hydrogen peroxide and some explosives and other chemicals. Motor-car industry was left without numbers of plastic accessories. Rubber industry was left without a great number of assortments of heavy pneumatics and a part of rubber-technical goods.
Chemical Industry in Serbia Today
In spite of the above-mentioned long-term troubles, domestic chemical industry still plays a very important role in the Serbia’s economy and external trade achievements. Its share in gross domestic product of the overall industry of Serbia is about 10.5%. The share of both chemicals & chemical products and rubber & plastic products in total industry’s gross domestic product overcame 14.2% in 2004.
Chemicals and chemical products play a very important role in external trade of Serbia. In 2004, chemicals & chemical products were in first place according to the share in total value of imports and in third place according to the share in total value of exports. The share of both chemicals & chemical products and rubber & plastic products in total exports of Serbia overcame 20% in 2004.
Share of chemicals & chemical products in total external trade of Serbia
Imports and Exports
Previously mentioned problems are doubtlessly the limiting factor regarding:
- Possibilities for recovery of production activities in a number of chemical factories that operate at minor level of capacity utilization;
- Competitiveness of domestic manufacturers at the world market;
- Perspectives regarding future development.
However, there are several factors that could be considered as comparative advantages of domestic chemical industry. By order of their relative importance those factors could be as follows:
- Well developed market of demand, both in Serbia and Montenegro, and gained export markets, especially in Russian Federation and other countries of South-East Europe;
- Well-skilled staff with extensive experience in production management and project management;
- Available sources of still non-exploated raw materials as follows:
- Metallic ores and non-metallic minerals for use in inorganic chemistry (copper, manganese, fluorides, borates, phosphates etc.);
- Sources of vegetable and animal origin for use in “green chemistry” and oleochemistry;
- Some of basic petrochemicals (propylene, raffinate-2, methanol, acetic acid) that are available for use in the production of down-stream derivatives.
All competitive weaknesses and advantages of domestic chemical industry have been evaluated in sub-project “Chemical Industry”, which was an integral part of global project named “The Strategy of Economy Development in Serbia up to 2010”. This project had been organized and coordinated by the Government of Serbia and Prime Minister personally. It started at the end of 2001 and ended in the summer of 2003. The chemical industry is classified in the group of domestic industrial sectors having the best chances in realization of the export oriented development strategy.
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