Methanex Curtailed by Argentinian Gas Uncertainty

| About: Methanex Corporation (MEOH)
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Raymond James analyst Daryl Swetlishoff downgraded Methanex Corp. (NASDAQ:MEOH) from "market perform" to "underperform" on Wednesday, telling clients the company's recent share price appreciation is being threatened by an increasingly uncertain gas situation in Argentina.

On Wednesday, Methanex announced that three of its four Chilean production units remain shut down due to Argentinian gas curtailments. But with summer soon arriving in Argentina, bringing with it warmer weather, it is presumed that the flow of natural gas to Methanex facilities will resume shortly.

Mr. Swetlishoff, however, thinks differently and said production interruptions could linger longer than expected. As a result, he lowered his 2007 earnings per share estimate from C$2.22 to C$2.08.

"We suspect Argentinian politics could further delay the availability of gas exports to Chile," he said in a research note.

With an Argentinean election slated for the end of October, we highlight the potential for Argentina to limit gas exports to satisfy local concerns over domestic gas supply.

The analyst also said there could potentially be a technical issue with an undersea pipeline, further delaying at least one facility from resuming production in the near term.

Shares in Methanex were down almost 3% Wednesday afternoon to roughly C$23.32. Mr. Swetlishoff price target on the stock is C$18.

MEOH 1-yr chart: