BMI View: N aphtha costs will be crucial in the Israeli petrochemicals industry over the medium term. The theoretical surplus between supply and demand in the global oil market will grow over the coming years, precipitating a decline in the price of oil and a corresponding decline in naphtha feedstock costs. For Israel's relatively small, naphtha-fed petrochemicals industry, this will be crucial to ongoing profitability.
In January-May 2016, the value of plastic and rubber output grew 9.7%, rebounding from a lacklustre year in 2015 when it fell 0.4%. Chemicals saw growth of 11.2%, building on 1.6% growth in 2015. However, much of this growth was due to rising product prices on the back of growth in feedstock costs. With petrochemicals producers seeing margins squeezed in H116, strong headline figures appeared to hide a market that is stagnating with potential for contraction in volumes.
External markets are playing a crucial role in determining the fate of the Israeli economy, as accommodative fiscal and monetary policies have largely reached their limits in stimulating growth in petrochemicals consuming markets, such as construction. Although faltering growth in key developed export markets will continue to weigh on the relatively large external sector, diversification towards faster-growing emerging markets, as well as ongoing product specialisation, could lessen the constraint.
Israel's petrochemicals capacities are likely to remain unchanged over the next five years, with 698,000 tonnes per annum (tpa) ethylene, 960,000tpa propylene, 125,000tpa benzene, 230,000tpa xylenes, 570,000tpa polyethylene (PE), 680,000tpa polypropylene (PP), 200,000tpa polyvinyl chloride (PVC) and 145,000tpa of methanol. BMI envisages no increase in petrochemicals capacities over the next five years.
Controversies over environmental pollution at Haifa, which saw plans to expand the complex's storage facilities by 20% rejected, will limit investment not only in the city's ageing plants but also other areas of the petrochemicals sector. Problems associated with chemical spills and air pollution are prompting legislators and regulators to be far more critical of the petrochemicals industry and its potential for harm.
Israel remains in sixth place in BMI's Middle East and Africa Petrochemicals Risk/Reward Index matrix, but its score has fallen 0.3 points this quarter to 53.0 points due to a 4.0 point reduction in its market risk score. The rising cost of naphtha, declining margins, environmental concerns and a more precarious macroeconomic environment have helped erode the attractiveness of the Israeli petrochemicals sector to investors. Nevertheless, it retains the best country risk score in the Middle East, but it is unlikely that Israel will see movement in its ranking in the foreseeable future.
The Israel Petrochemicals Report has been researched at source, and features BMI Research's market assessment and independent forecasts for key petrochemicals sub-sectors. The report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing companies by products and services, sales, market share, investments, projects, partners and expansion strategies.
BMI's Israel Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Israeli petrochemicals industry.
- Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Israeli petrochemicals market.
- Target business opportunities and risks in the Israeli petrochemicals sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Israel.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering the petrochemicals markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the petrochemicals sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Energy: Oil production (‘000 b/d), oil consumption (‘000 b/d), net oil exports (‘000 b/d), gas production (bcm), gas consumption (bcm), net gas exports (bcm), oil refinery capacity (‘000 b/d).
- Petrochemicals: Ethylene capacity (‘000 tpa), ethylene production (‘000 tpa), ethylene consumption (‘000 tpa), polyethylene capacity (‘000 tpa), polypropylene capacity (‘000 tpa), polyvinyl chloride capacity (‘000 tpa), polyolefins consumption (‘000 tpa).
- Oil Products Prices: Price forecasts for all major oil-based products (USD/bbl) at major global energy trading hubs.
- Economic: Nominal GDP (USDbn), real GDP growth (%), GDP per capita (USD), population (mn), unemployment (%), exchange rate (against USD).
BMI’s Petrochemicals Risk Reward Index
BMI’s Risk Reward Indices provide investors (both corporate and financial) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Structure, size and value of the industry sector; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Industry Trends & Developments
Evaluation of company and sector-wide developments, including key projects (as well as expansion plans), latest company financial details and proposed international ventures.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Global & Regional Market Overview
Analysis of the key trends driving the global industry, including worldwide output/capacity and demand analysis across ethylene, polyethylene, polyvinyl chloride, polystyrene, polyethylene terephthalate and polypropylene. The regional analysis looks at the implications of local and global trends on specific company activity.
Sub-sectors covered by the Petrochemicals Reports include:
Oil & Gas, Oil Refining, Olefins (ethylene, propylene), Polyolefins (polyethylene, polypropylene), Polyvinyl Chloride, Polystyrene
Please note – not all country Reports cover all sub-sectors – see website for details.
The Petrochemicals Market Reports are based on a network of primary sources, such as multilateral organisations (ACC, APLA, Cefi c, ICCA, ICMA), national chambers of commerce and industry, national statistical offi ces, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.