Jim C.

Methanex: Worth Another Look

It is correct that Methanex' only product is METHANOL, a liquid, and not methane, which is a gas. Methanol is produced from natural gas and Methanex has had to close 3 of 4 of its New Zealand production units and also 3 out of 4 of its Chilean plants because of a lack of this feed stock. No real relief is in site for the foreseeable future. Granted, Methanex may be the largest seller of methanol in the world but, because of the units sidelined, it is no longer the largest producer.In order to cover its sales committments Methanex has now become the largest BUYER of methanol in the world at about 2.5 million metric tons last year. This makes them notheing more than a market intermediary or methanol trader by buying and selling a global commodity. However, global spot methanol prices, the market Methanex purchases from, are currently below contract prices that provides Methanex an attractive arbitrage. Also a plus for Methanex is their Waterfront Shipping sub that was an anchor around its neck because of the plant shutdowns but now those vessels can be put into the clean petroleum products market, but that also has downwards pressure.