Boston, MA -- (SBWIRE) -- 03/18/2013 -- The Israel Petrochemicals Report examines the impact of the eurozone slowdown on chemicals output and considers alternative markets for exports. The report examines the impact of the petrochemicals industry's exposure to developed markets and considers how Israel is seeking to maximise opportunities elsewhere. The report also analyses how industry consolidation, coupled with currency depreciation, has affected the structure of the Israeli petrochemicals market and whether this has balanced out the cost disadvantages caused by a lack of indigenous feedstock sources.

Israel's chemicals industry faced slowing activity on the domestic market and the eurozone sovereign debt crisis, although this was mitigated by increased exports to Latin America, particularly in the fertiliser sector. While there have been reports of net losses in some segments amid weakened exports, BMI believes the decline will be reversed in 2013 when the domestic market recovers amid GDP growth of 3.3%. BMI also has a bullish view of the medium-term outlook as the economy continues to strengthen over the forecast period.

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Of more concern to the Israel petrochemicals industry over the medium term is the downturn in industrial growth. This will limit domestic petrochemicals consumption growth in downstream industries, although the shekel's weakness should undermine the competitiveness of petrochemicals imports on the local market.

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

- Although faltering growth in key developed export markets will continue to weigh on the relatively large external sector, Israel's increasing diversification towards faster-growing emerging markets, as well as ongoing product specialisation should lessen the constraint.
- BMI expects the Israeli shekel to continue depreciating, enabling chemicals exporters to maintain competitive prices.
- Naphtha costs will decline in line with oil prices, leading to an easing of costs through the petrochemicals value chain and bolstering domestic production.
- BMI does not envisage any substantial increase in petrochemicals capacities during our forecast period (ending in 2017), with no plans for any new petrochemicals plants over the medium term.
- In BMI's MEA petrochemicals risk/reward ratings matrix, Israel lies in fifth place, with a score of 56.8 points, unchanged since the previous quarter. With no planned significant growth in petrochemicals capacities over the medium term, Israel's score is unlikely to change much between now and the end of our forecast period in 2017, although it could be improved by better political, economic and business risk ratings.

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