What Methanex (MEOH) Said on Its Q3 Earnings Call

Key Points

• Strong Q3 performance: Methanex reported $543 million in adjusted EBITDA and $284 million in adjusted net income, supported by elevated methanol prices and record North American production. The company ended the quarter with more than $900 million in cash.
• Market disruption remains significant: Middle East supply reaching global markets has fallen to an estimated 5%–10% of normal levels, while China’s coastal methanol-to-olefins demand has been fully idled. The resulting supply constraints have kept methanol prices elevated, though global demand has also declined by roughly 10 million to 15 million tons annually.
• Positive near-term outlook with deleveraging focus: Methanex expects fourth-quarter adjusted EBITDA to exceed Q3 levels if current prices hold, while prioritizing debt reduction and targeting a 2.0–2.5 times adjusted debt-to-EBITDA ratio. It also plans to indefinitely idle its New Zealand operations starting in Q1 2027 and authorized buybacks of up to 5% of outstanding shares.

Methanex NASDAQ: MEOH reported third-quarter adjusted EBITDA of $543 million and adjusted net income of $284 million, supported by elevated methanol prices and higher produced-methanol sales volumes. The company sold 2.3 million tons of produced methanol during the quarter at an average realized price of $510 per ton.

President and CEO Rich Sumner said third-quarter EBITDA declined from the prior quarter primarily because of a lower average realized price, partly offset by increased sales volumes. Results also included a $10 million restructuring accrual related to the company’s New Zealand operations.

“These outstanding operating results drove record levels of cash flow generation for our business,” Sumner said, adding that Methanex ended the quarter with more than $900 million in cash.

Middle East Disruption Reshapes Methanol Market

Methanex said the ongoing conflict in the Middle East continued to restrict regional methanol supply, contributing to elevated prices, inventory drawdowns and demand destruction across consuming markets. The region normally supplies 15 million to 20 million tons of methanol annually, representing roughly 30% to 35% of the internationally traded market, according to Sumner.

The company estimated that Middle East supply currently reaching the market is about 5% to 10% of normal annual levels. Methanex said this supply reduction has been balanced by the shutdown of all coastal methanol-to-olefins, or MTO, demand in China, along with reduced operating rates in the Middle East, Southeast Asia and India.

Sumner estimated annualized global industry demand has fallen to about 90 million tons, representing a reduction of 10 million to 15 million tons. He said the shutdown of China’s coastal MTO operations marked the first time the entire segment had been idled since the sector began operating, removing an estimated 9 million to 10 million tons of normalized annual demand from the market.

Methanex cited spot prices of approximately $500 to $550 per ton in the Atlantic region, $550 to $650 per ton in Asia excluding China, and roughly $500 per ton in China. Prices in Asia and China rose by an estimated $100 to $150 per ton during September after a temporary ceasefire between mid-June and early July had briefly allowed more supply to reach the market.

The company said it was not aware of specific material damage to methanol production facilities in the Gulf region, though the impact of potential disruption to natural gas and related infrastructure remains unclear. Sumner said uncertainty remains over how long current market conditions will persist and what the eventual normalization of the industry could look like.

Production Led by Record North American Volumes

Methanex produced 2.1 million tons of equity methanol during the third quarter, including a record 1.6 million tons across Canada and the United States.

• Geismar produced 1.007 million tons of methanol.
• Medicine Hat produced 140,000 tons.
• Beaumont produced 199,000 tons of methanol and 83,000 tons of ammonia after cooling-tower repairs were completed early in the quarter.
• Methanex’s equity share of Natgasoline production was 221,000 tons.
• Chile produced 221,000 tons, with output affected by seasonal reductions in Argentine natural gas availability during the Southern Hemisphere winter.
• New Zealand produced 156,000 tons after restarting in July following a planned winter outage.

Chile resumed two-plant operations late in the quarter as planned. Sumner said Methanex has sufficient pipeline capacity to support full-year operating rates in Chile if natural gas becomes available, and he cited continued development of Argentina’s Vaca Muerta region and related infrastructure as positive long-term developments. However, he said the company expects Chile production to remain closer to 1.4 million tons in 2027 while it works toward potential year-round gas availability over the next several years.

The Egypt plant operated at full rates through the summer, and management said it continued to run at full rates despite questions regarding regional gas-grid balances.

Methanex maintained its forecast for about 9 million tons of equity methanol production in 2026, subject to turnaround timing, gas availability, unplanned outages and other events.

Fourth-Quarter Outlook and New Zealand Wind-Down

Based on October and November contract postings and current spot prices, Methanex expects its average realized price for those two months to range from $525 to $550 per ton. Assuming current price levels hold through December and produced sales volumes are similar to the third quarter, the company expects fourth-quarter adjusted EBITDA to exceed the third-quarter result.

The company reiterated that it plans to indefinitely idle its New Zealand operations beginning in the first quarter of 2027. Methanex has agreed to sell its remaining gas entitlements through the end of the decade, a decision it said followed a deterioration in its outlook for gas availability in the country.

Sumner said the gas agreement is expected to generate some cash, although he described the expected inflow as not meaningful or material.

Debt Reduction and Share Repurchases

Methanex said it is directing most free cash flow toward debt reduction while allocating a smaller portion to shareholder returns. After the quarter ended, the company repaid $300 million of its 2027 senior notes and expects to redeem the remaining $400 million during the fourth quarter.

The board also approved a normal course issuer bid that allows Methanex to purchase and cancel up to 5% of its outstanding shares. Sumner said the company views buybacks as attractive when shares trade at conservative mid-cycle valuations or below, but said deleveraging remains the primary capital-allocation focus.

The company is targeting adjusted debt-to-adjusted EBITDA of 2 times to 2.5 times. Chief Financial Officer Dean Richardson said Methanex has multiple options for further debt reduction after addressing its 2027 notes, including debt at the Natgasoline joint venture and the company’s 2029 and 2032 bonds.

Management said it remains committed to its dividend, while viewing flexible share repurchases as its primary form of capital return. Sumner said the company would consider increasing the per-share dividend to maintain the overall dividend level as the share count declines through repurchases.

For 2027, Methanex expects to undertake two to three turnarounds, toward the high end of its normal range. Capital spending is expected to exceed the company’s typical annual estimate of about $150 million, though management said the increase should not be significant because some spending has already been pulled into the second half of 2026.

About Methanex (NASDAQ:MEOH)

Methanex Corporation is a global producer and supplier of methanol, a clear, biodegradable liquid chemical used in a wide range of industrial and consumer applications. The company markets methanol to customers worldwide and supports distribution through a global network of production facilities, storage terminals and transportation infrastructure.

Methanol is used to manufacture formaldehyde, acetic acid, solvents, adhesives, plastics and other chemical products. It is also used in fuel applications, including as a blending component, a feedstock for biodiesel and in the production of olefins and other alternative fuels.

Founded in 1992 and headquartered in Vancouver, British Columbia, Methanex operates production facilities and related assets in several regions, including North America, South America and New Zealand.

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