Ex-Yugoslavian Lube Markets Struggle


ROVINJ, Croatia – Lubricant demand in the former Yugoslavia slumped by 29 percent over the past 10 years, battered by low industrial output and recession in key lubricant markets such as Croatia and Serbia, a consultant said during a conference here.

Both countries have seen a significant drop in lube consumption in the past decade – Serbias slumped from about 47,000 metric tons in 2004 to about 30,000 tons in 2014, while Croatias dropped from about 42,000 tons to 23,000 tons over the same time, according to Robert Mandakovic, chief lubricant market consultant for the Croatia Society for Fuels and Lubricants. The group is known as Goma, its Croatian acronym.

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This market is driven by the automotive sector, Mandakovic told Gomas Lubricants and Base Oils symposium held here last week. In the developed world, breakdown between the automotive and industry lube demand is roughly 50-50, while in Croatia and ex-Yugoslavia countries, it is roughly 60-40. [The drop in lube consumption] means the industry is weak and the economy is slow.

With a population of about 22 million, the former Yugoslavia region consists of six countries – Slovenia, Croatia, Serbia, Bosnia and Herzegovina, Montenegro and Macedonia, as well as Kosovo, an autonomous territory that gained independence from Serbia in 2008.

Total lubricant demand in the region slumped from about 145,000 tons in 2004 to about 103,000 tons in 2014 – a 30 percent drop.

Croatia joined the European Union in 2013, and since then its economy is even more dependent on trade with the neighboring countries, he said. He also cited several other contributing factors, such as the global recession and, halted production in obsolete and state-run industries, and increased use of new cars and equipment, which use less lubricants.

Goma found that similar trends of low demand have been observed in neighboring parts of Central and Southeast Europe, such as Hungary, Romania and Bulgaria. Albeit at a slower pace, the trend of weak or stagnated lube consumption is taking place in Macedonia and Montenegro, Mandakovic said.

In 2004, Serbia held a 32 percent share of the regions total lube market, followed by Croatia with a 29 percent market share. Bosnia and Herzegovina, Slovenia and Macedonia held shares of 15 percent, 14 percent and 6 percent, respectively, while Kosovo and Montenegro each accounted for 2 percent.

What is a unique characteristic for this trend is that Kosovos lubricant demand grew substantially since the early 2000. According to our field research, it now comprises 4 percent of the regions total lube market, Mandakovic said. He added that in the light of the poor state of the economy in Kosovo, there is no other explanation for this growth except that the U.S. Army has expanded Camp Bondsteel, the largest U.S. military base in the Balkans. It opened in 1999. Obviously, it drives the local lube consumption, he said.

In 2014, regional lubricant consumption per capita was the highest in Slovenia, at around 7 kilograms of used lubes consumed per capita per year. Croatia and Serbia had the next-highest rates, at almost 6 kg and 5 kg of used lubes per capita per year. In Bosnia, consumption reached 4 kg, while in Macedonia and Kosovo, it was 3.5 kg and about 2 kg, respectively.

Goma expects Croatias lube demand to grow slightly to 26,000 tons/year by 2025. This is based on the gross domestic product, which is projected to grow by 1.6 percent in 2016, with the assumption that lube consumption could sustain a steady positive result of at least 0.5 percent in annual growth, Mandakovic explained.

The society expects the regions lubricant demand to grow by up to 110,000 tons/year by 2025.

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