Foreign investment has turned the Balkan economy into one of Europe’s fastest-growing tyre production platforms. Beneath the record trade surplus, however, Serbia’s plastics industry remains dependent on imported materials and faces an expensive adjustment to the EU’s circular-economy rules.
Serbia’s rubber and plastics industry appears, at first sight, to be one of the cleaner successes of the country’s manufacturing strategy. Exports from the sector increased by 16.5 per cent to €2.86bn in 2025, while imports rose by only 3.4 per cent to €1.77bn. The resulting trade surplus reached €1.09bn, up from €739mn a year earlier. Rubber and plastic products accounted for 8.6 per cent of Serbia’s total goods exports, making the sector a material source of foreign-exchange earnings and industrial output. The momentum continued into 2026: first-half exports rose another 8.5 per cent to €1.54bn, while imports increased by 2.9 per cent to €910mn, lifting the six-month surplus to €630mn.
Yet the combined figures conceal two industries moving in very different directions. Serbian production of rubber and plastic products increased by 15.2 per cent in 2025, but rubber output surged by 34.6 per cent, while plastic-product manufacturing contracted by 8.3 per cent. The sector’s record performance was therefore not the result of a broad improvement in competitiveness across hundreds of manufacturers. It was predominantly the consequence of new tyre capacity entering commercial production.
That distinction matters because the economic structure of tyre manufacturing bears little resemblance to that of plastics conversion. Tyres are produced in large, capital-intensive plants integrated into global automotive and replacement-market supply chains. Plastic products are manufactured across a much more fragmented landscape of packaging companies, pipe and profile producers, construction-material suppliers, automotive-component businesses and smaller converters serving food, agriculture and consumer-goods customers. One branch is being reshaped by billion-euro-scale foreign investment; the other remains more exposed to imported polymers, weak bargaining power and regulatory expenditure that cannot easily be passed on to customers.
The industry is nevertheless significant for Serbia. Manufacture of rubber and plastic products generated approximately €805mn of gross value added in 2024 and employed about 34,300 people. Gross exports are several times larger than domestic value added, reflecting the import content of materials, machinery and components, as well as the role of multinational manufacturing networks. Serbia has become an effective location for converting imported inputs into exportable industrial products, but the distance between export turnover and locally retained value remains an important measure of the sector’s development.
The tyre segment is the clearest expression of this model. Toyo Tire opened its Inđija plant in late 2022 following an investment of €382mn. The facility, the Japanese company’s first greenfield tyre factory in Europe, was designed for annual production of around 5mn tyres and employment of more than 500 workers, with exports directed towards Europe, the Middle East, Africa and North America. It introduced a highly automated production system built around integrated manufacturing and enterprise-management technology rather than the labour-intensive assembly operations historically associated with parts of Serbia’s foreign-investment model.
The larger step came from China’s Linglong Tire in Zrenjanin. Construction began in 2019, truck-tyre trials followed in 2023 and passenger-tyre production started in early 2024. Serial production was formally launched in September 2024 after an investment exceeding $1bn. The first phase employed 1,235 Serbian workers, with the workforce planned to rise above 1,800. The timing makes the Linglong ramp-up the most plausible main contributor to the extraordinary increase in Serbian rubber production during 2025, although official industrial data do not allocate the expansion company by company.
Serbia had already produced 21.5mn vehicle tyres in 2024, alongside more than 17,400 tonnes of other rubber products. Much of that year preceded Linglong’s full commercial ramp-up, indicating that the country’s effective tyre capacity has moved substantially beyond the level captured in the latest detailed physical-production statistics. Together with Tigar Tyres in Pirot and industrial-rubber operations associated with companies such as ContiTech, Hutchinson and Trelleborg, the Inđija and Zrenjanin plants have created a geographically dispersed rubber cluster rather than a single isolated investment.
The near-term numbers are impressive, but the economics are becoming more demanding. The construction and ramp-up phase naturally produces exceptional growth rates as new lines move from testing to commercial utilisation. Once that process is complete, tyre plants must generate returns through capacity utilisation, product mix, quality control and operating efficiency rather than through the statistical effect of opening new capacity. Serbia’s rubber exports will remain large, but a repeat of the 34.6 per cent production increase recorded in 2025 is neither necessary nor likely for the industry to remain successful.
The next test will be the amount of value that can be localised around the factories. Tyre production requires compounds, steel cord, textiles, moulds, tooling, testing, maintenance, logistics and increasingly sophisticated software and traceability systems. A plant that imports most of these inputs can still deliver exports and employment, but its contribution to domestic productivity and supplier development is narrower. Serbia’s industrial return will depend increasingly on whether local engineering, materials and service companies become embedded in the factories’ procurement chains.
The plastics business presents less flattering arithmetic. Product-level data compiled by the Serbian Chamber of Commerce show that Serbia exported approximately €1.2bn and 426,337 tonnes of plastic materials and products in 2024, while importing about €2bn and 806,914 tonnes. The resulting plastics deficit was approximately €846mn. These customs-based product figures are not directly identical to the activity-based trade statistics used for the combined rubber and plastics industry, but they reveal the underlying structure clearly: the sector-wide surplus is overwhelmingly supported by rubber and tyres, while the plastics economy remains a substantial net importer.
Germany was the largest individual destination for Serbian plastic exports, followed closely by Bosnia and Herzegovina, Hungary, Romania, Italy, Czechia and Croatia. That mix gives Serbian producers access to both the EU market and neighbouring western Balkan economies. Import dependence is more concentrated among large industrial suppliers: product-level imports from Germany were worth roughly €423mn in 2024, followed by Italy at €217mn, China at €175mn and Turkey at €135mn. The structure exposes domestic converters simultaneously to European technical standards, Turkish and Chinese price competition and fluctuations in international polymer markets.
Serbia manufactured 164,347 tonnes of plastics in primary forms in 2024. Downstream production included 172,051 tonnes of plastic plates, sheets, tubes and profiles, 121,217 tonnes of plastic packaging, 38,300 tonnes of plastic construction products and almost 40,800 tonnes of other plastic goods. These categories cannot be combined into a simple material balance because some products pass through several processing stages. Even so, the breadth of downstream conversion relative to domestic primary-polymer output, together with the trade deficit, points to continuing dependence on imported resins, specialised compounds and semi-finished materials.
That dependence creates a difficult margin structure. Small and medium-sized converters typically buy polymers at prices influenced by global oil, gas and petrochemical cycles, yet sell into markets where large retailers, food groups, construction companies and automotive customers possess considerable purchasing power. When resin prices rise, cost recovery can be delayed. When prices fall, customers quickly demand discounts and inventories may lose value. Energy, labour, certification and financing costs sit between these two pressures.
The more resilient parts of the plastics market are those in which engineering, regulation or customer qualification creates barriers to entry. Peštan’s pipes and profiles, Masterplast’s construction products and the automotive-related operations of Hutchinson and other international suppliers sit in a different competitive category from undifferentiated film, bags and commodity household products. Food-grade packaging, medical products, complex automotive components and infrastructure-related pipes offer more defensible positions, but require laboratory control, tooling, traceability and customer approvals. Commodity converters face the greatest exposure to imports and the smallest ability to finance the next round of environmental investment.
There are early signs that the 2025 plastics contraction has begun to stabilise. In the first five months of 2026, combined rubber and plastics output was 3.3 per cent higher than a year earlier. In May alone, plastic-product manufacturing increased by 6.3 per cent year on year, while rubber production rose by 2.6 per cent. This reversal fits the broader transition from a tyre-led capacity surge towards more normal growth across the industry, though one month does not establish a durable plastics recovery.
Pricing data suggest that the rebound is not being driven by broad inflation. Serbian producer prices for rubber and plastic products sold on the domestic market were 2.7 per cent higher year on year in July 2026 and only 1.6 per cent higher across January-July. The combination of modest domestic price increases, stronger export values and expanding physical production points towards capacity, volume and product-mix effects rather than a simple increase in selling prices. It also suggests that many converters retain limited pricing power.
Regulation is now becoming as important as demand. The EU Packaging and Packaging Waste Regulation entered into general application on 12 August 2026. It covers packaging placed on the EU market regardless of material or origin and sets a pathway towards all packaging becoming economically recyclable by 2030, alongside greater use of recycled plastic and reduced dependence on virgin material. Serbian packaging companies supplying EU customers, as well as Serbian manufacturers exporting packaged goods, will increasingly encounter these requirements through market-access rules, technical documentation and customer contracts.
The cost will not be confined to changing a label or filing an additional form. Packaging structures may need to be redesigned to reduce material use, eliminate combinations that are difficult to recycle and accommodate specified shares of recycled content. Producers will require better information on material composition, stronger batch traceability and more reliable evidence that packaging meets recyclability and safety requirements. Food-contact products face particularly demanding quality constraints because recycled feedstock must satisfy contamination and consistency standards, not merely nominal recycling targets.
Serbia’s domestic waste system provides a starting point but not yet a complete circular-materials solution. Approximately 414,154 tonnes of packaging were placed on the Serbian market in 2024. Operators reported recovering 281,385 tonnes and recycling 268,628 tonnes, equivalent to overall recovery and recycling rates of 68.4 per cent and 65.3 per cent, respectively. Those figures show that national targets were formally achieved, but aggregate recycling rates do not guarantee a stable supply of clean, segregated and specification-grade recycled polymer suitable for demanding industrial applications.
This gap creates one of the more attractive investment areas in the Serbian plastics market. The shortage is not simply recycling capacity in the broad sense, but dependable collection, sorting, washing, decontamination, compounding and quality assurance. Producers able to supply consistent recycled polyethylene, polypropylene or PET compounds with documented origins should gain relevance as EU customers tighten procurement requirements. The same applies to companies offering mono-material packaging design, testing services and production systems capable of handling higher recycled-content ratios without sacrificing performance.
Rubber manufacturers face their own regulatory transition. The EU Deforestation Regulation will apply from 30 December 2026 to large and medium-sized operators and from 30 June 2027 to most micro and small operators. Natural rubber and major derived products, including new tyres, remain central to the rules, which require operators placing covered goods on the EU market to demonstrate that they are deforestation-free and legally produced. A July 2026 scope update removed retreaded tyres and some other vulcanised-rubber articles, but it did not eliminate the core traceability exposure of new-tyre supply chains.
For Serbia, this is not a peripheral compliance question. The Serbian Chamber of Commerce estimates that EUDR-covered rubber exports to the EU were worth approximately €940mn in 2025, equivalent to around 4.4 per cent of Serbia’s total exports to the bloc, with new pneumatic tyres alone accounting for more than €750mn a year. Tyre factories will need data reaching back through traders and compound suppliers to the geographic origin of natural rubber. Larger groups possess the procurement systems and balance sheets to manage that process; smaller Serbian suppliers may struggle with digital records, supplier verification and due-diligence documentation.
Euro 7 adds a second pressure. For the first time, the EU’s vehicle-emissions framework brings tyre abrasion and associated microplastic emissions into the regulatory perimeter. Competition will therefore move beyond purchase price, grip and rolling resistance towards durability and measured abrasion performance. This should favour plants capable of advanced compound development, testing and process control, while increasing the value of local laboratories and engineering capacity.
The emerging market is therefore dividing into three broad economic positions. Large tyre manufacturers possess scale, export reach and access to multinational technology, but also create concentration risk: national performance can be influenced by utilisation decisions at a small number of plants. Producers of specialised rubber and plastic components occupy a smaller but potentially higher-value segment, protected by customer qualification and technical know-how. Commodity plastics converters face the weakest economics, combining imported-material exposure with price-sensitive customers and rising compliance expenditure.
A reasonable base case for 2026-28 is that combined rubber and plastics exports move from the double-digit surge of 2025 towards mid-single-digit annual growth. Tyres should continue to expand as recently installed capacity reaches stable utilisation, but the arithmetic of the initial ramp-up will fade. Plastics production should recover unevenly, led by packaging, pipes, profiles and engineered components rather than across-the-board volume growth. The first-half 2026 trade surplus suggests that the sector’s external position remains strong; the modest production and pricing data point to normalisation rather than another explosive year.
Serbia has already demonstrated that it can attract and operate globally scaled tyre factories. The harder industrial task is to turn those factories into a deeper materials and engineering ecosystem encompassing compounds, tooling, testing, recycling, automation and domestic supplier development. The €1.09bn trade surplus is real, but it rests on a two-speed structure: a globally competitive tyre platform and a plastics industry still financing its transition from imported-material conversion towards circular, higher-value manufacturing. The next gain will come less from another headline factory than from capturing more of the value surrounding those already in production.
