Fast Market Research recommends "Israel Petrochemicals Report Q4 2013" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 09/24/2013 -- BMI View: 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.
The extent to which the Israeli petrochemicals industry will benefit from growth will depend on the sector's competitiveness. Growth in natural gas production, with the beginning of production in the Tamar gas field, will provide an opportunity to reduce feedstock costs. A new hydrocracker at Carmel Olefins' Haifa refinery, installed in Q113, should boost long-term naphtha availability and improve margins. Meanwhile, recent cuts to interest rates have significantly slowed the appreciation of the shekel, which gained 11.4% as of June 2013 since hitting multi-year lows in July 2012. We see the unit trading sideways over the coming quarters, which will benefit Israeli exporters.
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Over the last quarter, BMI has revised the following forecasts/views:
- In 2013, the strongest growth rates in petrochemicals consumption should be in the polyvinyl chloride (PVC) segment as the construction sector grows due to an increase in residential construction prompted by lower mortgage interest rates and the release of pent-up demand.
- Industrial production should also lead growth in petrochemicals consumption over the next two years, supported by exports, although over the medium term a downturn in industrial growth is expected beyond 2013. This will limit domestic petrochemicals consumption growth in downstream industries.
- In the long-run, we expect private household consumption - currently under pressure due to austerity measures - to take the lead, augmenting the gains in exports. As such, BMI believes that the Israeli petrochemicals market should enjoy continued growth.
- In BMI's MEA Petrochemicals Risk/Reward Ratings (RRRs) matrix, Israel lies in fifth place, with a score of 57.4 points, unchanged. It lies 0.5 points ahead of Iran and 3.0 points behind Qatar. The Israeli petrochemicals industry RRR is not as favourable as those of some of its Middle Eastern rivals, such as Saudi Arabia, due to the country holding comparatively small feedstock reserves and having relatively low production capacity. However, it has a better competitive environment, given the broad product portfolio and an established downstream chemicals industry.
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