— By Vladislav Vorotnikov, for Plastics Information Europe / SOUTHEAST EUROPE —
Romania and Bulgaria are expected to reap the benefits of their rapprochement with other EU member states, as part of which both countries became full members of the Schengen zone as of 1 January 2025. However, a complicated political environment and unstable energy prices are putting heavy brakes on the countries’ development plans.
The plastics industry in both countries is expected to benefit from the move, although to different extents. As both countries are net exporters of plastic products, their plastics processors have been striving to gain better access to the joint European market. The problem for Bulgaria is that the shortest connection with the EU is via Serbia, which is not a member of the trade bloc. “For Romania, the most direct impact will be felt in the western part of the country, in Timişoara, Arad, and Oradea,” said László Bűdy, chief polymer market expert at myCEPPI, a consultancy.
The accord with the EU comes with its own challenges, said Alina Bilan (foto), partner on public procurement with ONV LAW, and president of the Romanian Association for Sustainable Local Development. “Joining the Schengen zone simplifies logistics significantly. Reduced customs formalities, shorter transit times, and lower administrative burdens help make Romanian and Bulgarian goods more competitive across Europe. For plastics manufacturers, which often operate on just-in-time delivery systems, this creates more efficient supply chains and potentially lowers costs.”
The accord with the EU comes with its own challenges, said Alina Bilan (foto), partner on public procurement with ONV LAW, and president of the Romanian Association for Sustainable Local Development. “Joining the Schengen zone simplifies logistics significantly. Reduced customs formalities, shorter transit times, and lower administrative burdens help make Romanian and Bulgarian goods more competitive across Europe. For plastics manufacturers, which often operate on just-in-time delivery systems, this creates more efficient supply chains and potentially lowers costs.”
Politics takes toll
Bulgaria and Romania are heavily reliant on raw material imports from Eastern, non-EU countries, and with a significant presence of foreign capital, have felt the ripple effects of the war in Ukraine. For instance, Rompetrol (Bucharest; www.rompetrol.com), a leading Romanian polymer manufacturer, is owned by the KazMunayGas International (KMG International, Astana, Kazakhstan; www.kmginternational.com) group, which is effectively controlled by the Kazakh state, Bűdy added. Lukoil Neftohim Burgas, a prominent refinery in Bulgaria, is owned by Russian oil giant Lukoil (Moscow; www.lukoil.com).
Related: DRS introduction in Romania brings sizeable results
“The situation of Lukoil Neftohim is particularly delicate, as the Bulgarian government is encouraging a sale, but the Russian owners have not yet announced any such intention,” Bűdy said. The political crisis, coupled with this dependence on raw materials imports, weighs heavy on development plans. “Before the Russia-Ukraine war, there were plans to build a new 280,000 t/y polypropylene plant in Bulgaria by 2030. This is no longer the case, despite the fact that PP consumption is close to 200,000 t/y in Bulgaria alone.”
The biggest obstacle in the development of the petrochemical industry in Romania is the lack of a steam cracker in the value chain. According to Bűdy, this is why Rompetrol produces LDPE from ethylene shipped by sea – not continuously, but rather only when the price is low and sufficient free quantity is available on the market.
Related: DRS introduction in Romania brings sizeable results
“The situation of Lukoil Neftohim is particularly delicate, as the Bulgarian government is encouraging a sale, but the Russian owners have not yet announced any such intention,” Bűdy said. The political crisis, coupled with this dependence on raw materials imports, weighs heavy on development plans. “Before the Russia-Ukraine war, there were plans to build a new 280,000 t/y polypropylene plant in Bulgaria by 2030. This is no longer the case, despite the fact that PP consumption is close to 200,000 t/y in Bulgaria alone.”
The biggest obstacle in the development of the petrochemical industry in Romania is the lack of a steam cracker in the value chain. According to Bűdy, this is why Rompetrol produces LDPE from ethylene shipped by sea – not continuously, but rather only when the price is low and sufficient free quantity is available on the market.
End of price regulation era
Price regulations imposed by the Romanian government at the onset of the energy crisis strengthened the plastics industry, but the time of price control now seems to be over. “A temporary price cap on electricity and gas introduced in late 2021 offered short-term relief to small and medium enterprises and households. However, the European Commission has requested this be phased out by July 2025, meaning industry pressure will likely return,” Bilan said.
Related: Uncertainty over oil supplies plagues Serbian petrochemical industry
Virtually all electricity used in Ukraine to plug the gap between supply and demand comes from Bulgaria and Romania. When compared with other EU countries, energy prices in Bulgaria and Romania are much higher as a result of their proximity to a war that has spanned nearly three years. Energy prices in Romania are rising, and since the government is no longer able to maintain a cap, the plastics industry is bracing for impact. “It is not yet clear at what level the energy prices will stabilise, but they will certainly be higher than they have been,” Bűdy said.
The future of plastics processing in Romania and Bulgaria is at a crossroads, largely determined by the trajectory of energy prices and, indirectly, by Emmissions Trading System (ETS) prices, Bűdy added. The fear is that if these two inputs rise too high, there could be a significant drop in production in both plastics processing and petrochemicals, a concern shared by other EU countries.
In general, Bűdy said, he is warned against being too optimistic about the industry’s future, particularly as it is not yet clear how the operational introduction of the ETS in 2027 will affect consumption and energy prices. “Basically, we expect decreasing demand and increasing energy prices,” he said. “There is a great need for investment in petrochemicals in the Balkan region, but at the moment, I see neither the chance nor the will. When the war is over and the petrochemical consolidation in Europe is complete, there will certainly be developments, but the successful developments will be more at NIS in Serbia, where the necessary complexity, refinery-cracker-polymer production, is available.”
Related: Uncertainty over oil supplies plagues Serbian petrochemical industry
Virtually all electricity used in Ukraine to plug the gap between supply and demand comes from Bulgaria and Romania. When compared with other EU countries, energy prices in Bulgaria and Romania are much higher as a result of their proximity to a war that has spanned nearly three years. Energy prices in Romania are rising, and since the government is no longer able to maintain a cap, the plastics industry is bracing for impact. “It is not yet clear at what level the energy prices will stabilise, but they will certainly be higher than they have been,” Bűdy said.
The future of plastics processing in Romania and Bulgaria is at a crossroads, largely determined by the trajectory of energy prices and, indirectly, by Emmissions Trading System (ETS) prices, Bűdy added. The fear is that if these two inputs rise too high, there could be a significant drop in production in both plastics processing and petrochemicals, a concern shared by other EU countries.
In general, Bűdy said, he is warned against being too optimistic about the industry’s future, particularly as it is not yet clear how the operational introduction of the ETS in 2027 will affect consumption and energy prices. “Basically, we expect decreasing demand and increasing energy prices,” he said. “There is a great need for investment in petrochemicals in the Balkan region, but at the moment, I see neither the chance nor the will. When the war is over and the petrochemical consolidation in Europe is complete, there will certainly be developments, but the successful developments will be more at NIS in Serbia, where the necessary complexity, refinery-cracker-polymer production, is available.”