Market Report, "Israel Petrochemicals Report Q4 2015", published

Growth in Israel's petrochemicals capacity is unlikely over the medium-term, particularly in light of lacklustre, below trend growth in chemicals, rubbers and plastics production. Producers will be banking on stronger economic growth in 2016, but BMI foresees sustained stagnation in the sector.

In, the first four months of 2015 chemicals output grew by just 0.3% y-o-y while rubber and plastic production rose 1.2%. This was well below the 4.2% overall manufacturing growth in Israel and demonstrates the sectors weaknesses and its inability to generate growth in spite of more favourable economic circumstances and lower feedstock costs.

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.

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Economic growth is unlikely to stimulate output. From 2016, we expect the economy to strengthen with growth of 3.4%, compared to 3.1%. Yet, if this does not give a boost to polymer processing, the impact on production volumes is not likely to be significant.

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.

In BMI's MEA Petrochemicals Risk/Reward Index (RRIs) matrix, Israel remains in sixth place and its score stays at 56.3 points this quarter. It retains the Middle East's best country risk score. Israel lies 2.8 points behind Kuwait and 6.0 points ahead of South Africa in the regional petrochemicals matrix. 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.

Key Benefits

* Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Israeli petrochemicals market.
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