Although Israeli petrochemical prices declined in 2015, margins improved as a result of falling naphtha costs even as sales stagnated. Israel's refinery sector has capitalised on imports of oil from Kurdistan as well as lower global oil prices, which has been fed through the production chain. With economic growth set to pick up in 2016, the outlook for the country's petrochemicals market is brightening, although capacity constraints will limit volumes.
Despite 1.7% manufacturing growth and improving economic performance, the petrochemicals industry witnessed lacklustre growth in 2015. In 10M15, plastic and rubber output declined 0.7% y-o-y, compared to 0.8% growth in 2014. Meanwhile chemicals declined 0.1%. In 9M15, Israel's main petrochemicals producer, Bazan Group, reported that aromatics output was down 4.7% to 365,000 tonnes, but polymers production grew 1.5% to 481,000 tonnes, indicating that the industry's performance varied across market segments.
Naphtha costs will be crucial over the medium term to defending and growing petrochemicals margins. 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. However, at issue are the sector's ageing plants, which are under investigation for environmental crimes with calls for closure due to the effects of operations on residents. The efficiency of the plants brings into question their long-term competitiveness. While BMI does not envisage an imminent closure, long-term stagnation is likely.
Israel's petrochemicals capacities are likely to remain unchanged over the next five years with 450,000 tonnes per annum (tpa) ethylene, 345,000tpa propylene, 125,000tpa benzene, 230,000tpa xylenes, 165,000tpa polyethylene (PE), 450,000tpa polypropylene (PP), 160,000tpa polyvinyl chloride (PVC) and 60,000tpa of methanol.
We forecast the Israeli economy to grow by 3.4% in 2016 compared to our estimate of 2.1% in 2015, but below the 4.2% average recorded between 2004 and 2014. Rising security threats will present the main challenge to industry growth.
In BMI's Middle East and Africa Petrochemicals Risk/Reward Index matrix, Israel remains in sixth place, but its score has risen 0.9 points to 57.2 points this quarter as the country's economy will expand faster than most of its developed peers, in line with the past decade's trend. It retains the Middle East's best country risk score. Israel lies 1.5 points behind Kuwait and 5.7 points ahead of South Africa in the regional petrochemicals matrix. In spite of this improvement, 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.