Israel Raw Materials Supply Chain Affected by Israel-Hamas Conflict
Israel-Hamas Conflict: global supply chain effects – diplomatic-political effects
The Israel-Hamas Conflict has caused major supply chain disruptions globally. Recent attacks on merchant vessels have diverted shipping away from the Red Sea to alternative sea routes. Prior to the October 7 2023, attack, the Suez Canal handled about 12% of global trade and was accessed by vessels travelling from Asia via the 30km wide Bab-el-Mandeb strait. Recent data shows that the number of ships crossing through the canal has fallen 66% since carriers began diverting their vessels around Africa.
Moreover, diplomatic and political disagreements between Israel with some of its trading partners has led to Israel needing to find new suppliers for raw materials as well as products, such as: iron, marble, steel, cement, aluminum, bricks, fertilizer, construction equipment, etc.
Turkey halts all trade with Israel
Turkey has banned all import/export activity with Israel due to Israel’s military actions in Gaza since May 2024. Although the volume of bilateral trade between the countries dropped to $5.7 billion in 2023, from a record $8 billion in 2022, the trade volume is significant, with Turkey being among the five largest exporters to Israel.
According to Israel Central Bureau of Statistics, import of metals from Turkey to Israel dropped sharply from approximately $138 million during October 2023, to $13 million in August 2024 (latest available figure). Plastic and rubber dropped from $35 million to $11 million. Mineral products from $13 million to less than a $1 million. Chemical substances from $16 million to $2 million.
Restoring economic equilibrium
Due to the Turkish embargo and other countries’ quiet trade embargos, as well as the extra-long and costly voyage for shipping vessels around the Cape of Good Hope, Israel’s manufacturers are looking for new sources of raw materials. These challenges present new opportunities for U.S. suppliers to enter a market with high demand and low supply.
In Israel, U.S. suppliers are widely regarded for their credibility, quality, after sale service, engineering, and consulting expertise. Furthermore, the United States-Israel Free Trade Agreement (FTA) entered into force in 1985 and is a significant benefit for U.S. businesses as U.S. products can enter Israel duty-free.
Next Steps
A U.S. company interested in further information about this topic, or other Chemicals and Industrial Materials opportunities, can contact yariv.moravnik-shavitt@trade.gov. Additionally, U.S. firms interested in expanding sales in Israel should consider working with the U.S. Commercial Service in Israel to explore matchmaking, market research or other assistance that may prove beneficial.
Resources
Reuters
The Institute for National Security Studies