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Methanex Corporation (MEOH): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:

We are maintaining our Neutral recommendation on Methanex. The company saw its profit tumble year over year in the third quarter on lower methanol pricing. Earnings missed the Zacks Consensus Estimate. Revenues fell year over year but managed to beat expectations. Methanex is well positioned to gain from its steps to boost capacity and from strong demand for methanol, especially in China. We are also optimistic about its Louisiana project, which is expected to create significant value for shareholders and meaningfully contribute to cash generation. However, Methanex may continue to face headwinds due to curtailment of gas supply and constrained spending across its end markets. Moreover, it is exposed to volatility in methanol prices.

Overview:

Headquartered in Vancouver, Canada, Methanex Corporation is the world's largest supplier of methanol to North America, Asia-Pacific, Europe and Latin America. Approximately two-thirds of all methanol demand is used to produce traditional chemical derivatives including formaldehyde, acetic acid and a variety of other chemicals that form the basis of a large number of chemical derivatives for which demand is influenced by levels of global economic activity. The remaining one-third of methanol demand comes from energy related applications. There has been strong demand growth for direct methanol blending into gasoline, as a feedstock in the production of dimethyl ether (DME), which can be blended with liquefied petroleum gas for use in household cooking and heating, and in the production of biodiesel. Methanol is also used to produce methyl tertiary-butyl ether (MTBE), a gasoline component, and an emerging application is for methanol demand into olefins. Methanex is the world's largest supplier of methanol to major international markets in Asia Pacific, North America, Europe and Latin America. Its total annual production capacity, including Methanex equity interests in jointly owned plants, is roughly 7.4 million tons and is located in Chile, New Zealand, Trinidad, Egypt and Canada.

Production facilities:

Methanex's Chilean plants have a production capacity of 1.8 million tons of methanol per annum. These plants serve the markets in North America, Latin America, Europe and Asia.

Methanex's plants in Trinidad have a production capacity of 2 million tons of methanol per annum.

Methanex's New Zealand plants have a production capability of 2.4 million tons. These plants primarily serve the markets of Japan, South Korean and China.

Methanex's plants in Egypt have a production capacity of 0.63 million tons of methanol per annum.

Methanex's plants in Canada have a production capacity of 0.56 million tons of methanol per annum.

Trading activity

Methanex purchases methanol from others under contract and on the spot market to meet customer requirements. The company sells methanol through a global marketing and distribution system.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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