Methanex Q2 Earnings Call Highlights

Key Points

• Strong Q2 results: Methanex reported $577 million in adjusted EBITDA and $300 million in adjusted net income, supported by higher methanol prices and record North American production. The company repaid its remaining $290 million Term Loan A balance and ended the quarter with more than $380 million in cash.
• Middle East disruption tightens supply: The conflict has disrupted 15 million to 20 million tons of annualized methanol supply that typically transits the Strait of Hormuz. Inventories have been substantially depleted, increasing pressure on demand—particularly China’s methanol-to-olefins sector—unless production and shipping routes normalize.
• Lower pricing but production outlook maintained: Methanex expects third-quarter realized prices of approximately $460 to $485 per ton, below Q2 levels, while elevated shipping costs create a $30 million to $40 million quarterly headwind. Despite idling its Trinidad Titan plant, the company maintained its 2026 equity production forecast at about 9 million tons.

Methanex NASDAQ: MEOH reported second-quarter 2026 adjusted EBITDA of $577 million and adjusted net income of $300 million, supported by higher methanol prices and strong production from its North American operations.

President and CEO Rich Sumner said the company generated its results from an average realized price of $529 per ton and produced sales of about 2.2 million tons. Adjusted EBITDA included a $12 million restructuring accrual related to operations in Trinidad and Tobago.

The company used operating cash flow to repay the remaining $290 million outstanding under its Term Loan A facility, ending the quarter with more than $380 million in cash. Sumner said Methanex intends to continue directing most available free cash flow toward cash accumulation and debt reduction amid a volatile market environment.

Middle East conflict disrupts global methanol supply

Methanex said the ongoing Middle East conflict has created an “unprecedented” disruption for the methanol industry. The company estimates that 15 million to 20 million tons of annualized methanol supply normally must transit the Strait of Hormuz to reach end markets.

According to Sumner, some supply, primarily from Iran, reached the market during the second quarter at reduced volumes and largely through inventories that existed before the conflict. Methanex estimates that roughly one-third of the affected volume entered the market during the quarter, including product released during a temporary ceasefire.

The supply shortfall was initially offset by inventory drawdowns, particularly in Asia, and demand rationalization. Methanol-to-olefins, or MTO, demand in China bore much of the impact, while demand also declined in markets including the Middle East, India and Southeast Asia.

Sumner said pre-conflict inventories have since been substantially reduced while the affected Middle Eastern production remains idle. He said that, under current conditions, the industry will face growing pressure to balance supply and demand through additional demand rationalization unless Middle Eastern production and shipping routes return to more normalized conditions.

Methanex said it does not have confirmation of long-term damage to Iranian methanol plants, although it has heard reports concerning the South Pars gas field and potential limits on gas processing. The company said the ability to restore gas supply, plant operating rates and reliable navigation through the Strait of Hormuz will be important to any market normalization.

North American output reaches record levels

Total equity methanol production was 2.2 million tons in the second quarter, slightly below the first quarter. North American production reached a record 1.6 million tons across Canada and the United States.

• Geismar produced 1.1 million tons, a quarterly record for the site.
• Beaumont produced 180,000 tons before being taken offline in early June for an unplanned cooling-tower repair.
• Methanex’s equity share of production from the Natgasoline joint venture was 204,000 tons.

The Beaumont plant restarted in early July after the company completed the 30-day outage. Sumner said the company also addressed additional plant vulnerabilities during the shutdown. Methanex is conducting technical reviews of both Beaumont and Natgasoline and said the assets have performed above the operating levels assumed in the acquisition valuation.

At Geismar, Sumner said the company’s production target is about 4 million tons annually, based on approximately 97% reliability, though output can vary depending on turnaround timing, catalyst life and unplanned outages.

Elsewhere, Methanex produced 327,000 tons in Chile, where it shifted to operating one plant midway through the quarter because of seasonal reductions in Argentine gas availability during the Southern Hemisphere winter. Egypt operated at full rates and produced volumes similar to the prior quarter. New Zealand produced 46,000 tons, as the company shut down the plant during May and June to manage gas-supply uncertainty before restarting it in early July at reduced rates.

Trinidad plant idled; production outlook maintained

On June 29, Methanex announced the indefinite idling of its Titan plant in Trinidad and Tobago after it was unable to secure a commercially viable natural gas contract. The company recorded a $115 million non-cash, after-tax asset impairment charge and the $12 million restructuring accrual.

Sumner said the existing gas contract was linked to methanol prices, but the economics were not favorable when assessed against Trinidad’s position in the company’s supply chain. Methanex concluded that a future contract was likely to be less favorable and chose to idle the plant.

The company expects 2026 equity production of approximately 9 million tons, maintaining its previous outlook despite Titan’s idling. Sumner said stronger-than-expected production in Egypt and New Zealand is expected to help offset the lost Trinidad volume. He also noted that production from Egypt is more cost competitive than output from Titan.

Lower third-quarter pricing expected, shipping costs remain elevated

Based on July and August contract price postings, Methanex expects its average realized price for those months to be approximately $460 to $485 per ton, assuming market conditions remain consistent. If that pricing holds through September and sales volumes remain near second-quarter levels, the company expects another strong quarter of earnings, though lower than the second quarter because of reduced pricing.

Sumner said the company’s current pricing outlook incorporated a sharp decline in spot prices during and after the temporary ceasefire, particularly in Asia. However, he said prices had already begun to recover and were near the upper end of Methanex’s guided range during the call.

Methanex also cited rising shipping expenses. Higher bunker costs and a less efficient fleet configuration are expected to create a $30 million to $40 million quarterly headwind versus the company’s planned run rate, with about half of the impact recognized in the second quarter and the remainder expected in the third quarter.

The company said bunker costs rose about 40% during the period, while fewer backhaul opportunities have forced greater reliance on time-chartered vessels. Methanex typically uses time-chartered vessels for about 80% of its shipping, but currently has effectively no spot-market exposure as it uses its chartered fleet to move its own product.

Looking ahead, Sumner said Methanex is nearing its initial leverage target of about three times adjusted debt to adjusted EBITDA. The company’s longer-term target is 2 to 2.5 times at mid-cycle pricing. Management said it is considering the timing and size of potential share repurchases as it evaluates future cash generation, debt reduction progress and the company’s share price.

About Methanex (NASDAQ:MEOH)

Methanex Corporation is a Vancouver, Canada–based company and one of the world's largest producers and suppliers of methanol. The company manufactures methanol, a key feedstock for a wide range of chemical products and industrial applications. Methanex markets its product to customers in energy, plastics, paints and coatings, and various chemical sectors, positioning the company as a critical link in the global supply chain for basic chemicals.

The company's core product, methanol, serves as a building block for downstream chemicals such as formaldehyde, acetic acid and methyl tertiary butyl ether (MTBE).

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