We have reaffirmed our Neutral recommendation on leading
). While the company is poised to gain from capacity expansion
and its Geismar methanol project, it remains exposed to natural
gas curtailment issues and weakness across end markets.
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BASF SE (BASFY): Free Stock Analysis Report
METHANEX CORP (MEOH): Free Stock Analysis
PETROLOGISTICS (PDH): Free Stock Analysis
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Methanex had a drab fourth-quarter of 2012 with both revenues and
adjusted earnings missing the Zacks Consensus Estimates. The
company turned to loss on a reported basis, hit by a hefty asset
impairment charge. Operating rates were lower-than-expected
across a number of plants.
Methanex feels that the methanol industry and its pricing
environment appear attractive in the longer term as global demand
is expected to surpass new capacity additions. Despite the global
economic weakness, demand for methanol remains healthy driven by
energy-related applications in Asia, particularly in China.
The company's healthy financial position, strong global supply
network and competitive-cost position is expected to strengthen
its position as the global leader in the methanol industry and
enable it to continue to deliver incremental returns to
Methanex has taken up a number of steps to boost capacity. We are
also optimistic about its Geismar, La., project which is expected
to create significant value for its shareholders and meaningfully
contribute in cash generation.
However, Methanex may continue to face headwinds due to gas
supply constraints and weak spending across its end markets.
Restricted supply of natural gas affected its operations in
Chile, Trinidad and Egypt in the fourth quarter. Although
Methanex is trying to resolve the issue, it expects the problem
to continue in the near term.
Methanex currently carries a short-term (1 to 3 months) Zacks
Rank #3 (Hold).
Other Stocks to Consider
Other companies in the chemical industry worth considering are
). All of them hold a Zacks Rank #1 (Strong Buy).