New Market Research Report: Israel Petrochemicals Report Q3 2016
Recently published research from Business Monitor International, "Israel Petrochemicals Report Q3 2016", is now available at Fast Market Research
[USPRwire, Tue Jun 14 2016] Israeli petrochemicals margins grew strongly in 2015 due to lower naphtha costs, which offset sluggish output and falling product prices. 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. Producers will be banking on improved demand to boost growth in earnings in 2016.
Naphtha costs will be crucial to defending and growing petrochemicals margins 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.
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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. Plans to expand the Haifa complex's storage facilities by 20%, submitted in January 2016, were dealt a major blow in April 2016 when it emerged that the regional planning and building committee rejected the application on environmental grounds.
Economic growth set to pick up in 2016, but at a lower rate than before, although end-markets such as construction will see above-trend growth.
Moves to exploit gas reserves are unlikely to boost the oil-based petrochemicals sector, and gas output is likely to be targeted at export markets.
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. BMI envisages no increase in petrochemicals capacities over the next five years.
Israel remains in sixth place in BMI's Middle East and Africa Petrochemicals Risk/Reward Index matrix, but its score has risen 0.1 point to 57.3 points this quarter due to a modest improvement in country risk. It retains the best country risk score in the Middle East. Israel lies 0.4 points behind Qatar and 4.8 points ahead of Egypt, in sixth place 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.
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