New Market Research Report: Israel Petrochemicals Report Q3 2013

The Israeli petrochemicals industry is set for export-oriented growth in 2013, which should overcome the negative effects of government austerity measures on domestic consumption. However, this exposes it to increased risk and any further crisis in the eurozone could have a severe impact on the sector's performance.

At present, Israel's petrochemicals industry is reliant on naphtha produced by local refinery capacity, but the advent of shale gas exploration could pave the way for ethane as an alternative feedstock. This would enable feedstock flexibility in ethylene production and improve competitiveness. Following the completion of an upgrade programme, operating income at Israel's largest refinery could increase significantly. The upgrade project, which includes a hydrocracker, will allow the plant's owner, Oil Refineries Ltd (ORL), to alter its products slate more easily, enabling it to respond to changes in domestic product demand.

Growth in domestic polymers consumption will be boosted by an expected increase in construction growth, prompted by an increase in residential construction. This will be in large part down to pent-up demand but also the impact of falling interest rates on mortgages. This should give boost polyvinyl chloride (PVC) consumption. Meanwhile, industrial production is set to rise 8.8%, providing a strong context for domestic market growth. At the same time, exports are expected to support manufacturing activity, particularly exports to the Americas which are witnessing growth in consumption. Of more concern to the Israel petrochemicals industry over the medium term is a downturn in industrial growth beyond 2013. This will limit domestic petrochemicals consumption growth in downstream industries.

Full Report Details at
- http://www.fastmr.com/prod/607158_israel_petrochemicals_report_q3_2013.aspx?afid=301

Over the last quarter, BMI has revised the following forecasts/views:

* In BMI's MEA Petrochemicals RRRs matrix, Israel lies in fifth place, with a score of 57.4 points, down 0.4 points since the previous quarter due to a deterioration in market risk - due to the potential impact of austerity measures on local consumption growth. It now lies 0.5 points ahead of Iran and 3.1 points behind Kuwait.
* The Israeli chemicals market is set to register stronger growth in 2013, in line with a 3.5% increase in economic growth, an upward revision from 3.1% forecast in the previous quarter.
* Meanwhile, industrial production is set to rise 8.8%, providing a strong context for domestic market growth.
* At the same time, exports are expected to support manufacturing activity, particularly exports to the Americas which are witnessing growth in consumption.

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