Executive Summary / Key Takeaways

• Strategic Expansion into Marine Fuels: Methanex is spearheading the marine energy transition through new global methanol bunkering partnerships in key hubs, leveraging its extensive supply chain and specialized expertise to meet rapidly growing demand for low-carbon methanol.
• OCI Acquisition Bolsters North American Production: The recent acquisition of OCI Global's methanol business significantly enhances Methanex's production portfolio with two world-scale facilities in Texas, shifting 65% of its production to North America with access to stable, economic natural gas.
• Deleveraging as a Top Priority: Post-acquisition, Methanex is committed to directing all free cash flow towards debt reduction, targeting a return to pre-deal leverage levels by repaying $550 million to $600 million over 18 months, assuming a $350/tonne realized methanol price.
• Operational Resilience Amidst Regional Shifts: Despite challenges in New Zealand and Egypt, Methanex has optimized its global production footprint, with strong performance from Geismar 3 and increased output from Chile, contributing to an expected 2025 equity production guidance of approximately 8 million tonnes.
• Favorable Market Dynamics and Pricing Power: The methanol industry continues to exhibit balanced-to-tight supply dynamics, with demand expected to outpace limited new capacity additions beyond 2025, supporting Methanex's realized pricing premiums over the marginal cost of production.

Methanex's Global Reach and Strategic Evolution

Methanex Corporation, established in 1968 and headquartered in Vancouver, stands as the world's largest producer and supplier of methanol. Its expansive global footprint spans Asia Pacific, North America, Europe, and South America, serving a diverse clientele of chemical and petrochemical producers. The company's strategic evolution has been marked by a relentless focus on operational excellence, supply chain optimization, and, increasingly, leadership in the energy transition. This foundational strength, coupled with its extensive network of storage and terminal facilities and its subsidiary Waterfront Shipping's decade-plus experience in methanol-fueled tankers, positions Methanex uniquely in the global chemicals landscape.

The company's history is punctuated by strategic operational adjustments. In 2024, Methanex achieved its best safety performance on record, underscoring its commitment to responsible operations. Key shifts included idling the Atlas plant in Trinidad while restarting the Titan plant, a move that removed one million tons of methanol from the global market and adjusted Methanex's equity production by approximately 200,000 tons. In New Zealand, gas supply challenges led to the difficult decision to indefinitely idle one of its two Motunui plants, with 2025 production forecasted at approximately 400,000 tonnes. Conversely, Methanex secured favorable gas contracts in Chile, extending agreements until 2030 and 2027 and enabling two-plant operations at full rates during non-winter months, projecting a fourth consecutive annual increase in production from Chile to between 1.3 million and 1.4 million tons in 2025.

Technological Edge: Fueling the Future of Marine Transport

Methanex's technological differentiation is most evident in its pioneering role in methanol bunkering, a critical component of the marine energy transition. Through its subsidiary, Waterfront Shipping, Methanex has amassed over a decade of experience operating the world's largest fleet of methanol-fueled tankers. This operational expertise has translated into the development of a comprehensive methanol bunkering safety package and technical guidance, based on internationally recognized protocols. This robust safety framework and technical know-how are tangible benefits that Methanex offers over alternatives, ensuring a safe and fully supported bunkering experience for shipping companies, bunkering operators, and terminals adopting methanol as a marine fuel.

The "so what" for investors is clear: as the demand for low-carbon methanol is expected to rise sharply in the coming years due to tightening regulatory requirements from the International Maritime Organization (IMO), Methanex is strategically positioned to capture this growth. The company estimates that potential marine fuel demand from dual-fuel ships could reach approximately 2 million tons by the end of 2025, with over 350 containerships projected to enter the market over the next four to five years. While conventional methanol is currently more expensive than Very Low Sulphur Fuel Oil (VLSFO) but cheaper than marine gas oil (MGO), discussions with shippers are increasingly focused on low-carbon methanol, aligning with Methanex's strategic initiatives. The company's recent launch of global methanol bunkering operations in the ARA region and South Korea, through partnerships with TankMatch, Alpha Maritime, and Hyodong Shipping, directly leverages this technological and operational advantage to provide an integrated, end-to-end methanol fuel solution in pivotal trade corridors.

Competitive Arena: Standing Tall in a Dynamic Market

Methanex operates within a competitive chemicals landscape, but its focused expertise in methanol production and supply provides distinct advantages. While direct competitors like Celanese Corporation (CE), LyondellBasell Industries N.V. (LYB), and Air Products and Chemicals, Inc. (APD) offer diversified chemical portfolios, Methanex's core strength lies in its specialized methanol infrastructure and global distribution network. This includes owned vessels and terminal facilities, which translate into enhanced customer loyalty through reliable delivery and potentially stronger pricing power. This specialized moat allows Methanex to achieve qualitatively superior margins by reducing downtime and improving efficiency in methanol-specific operations.

Compared to LyondellBasell, Methanex's dedicated methanol supply chain offers superior distribution reliability, potentially exploiting LYB's more generalized logistics. Against Air Products, Methanex's established methanol infrastructure might offer significantly higher efficiency in supply chain execution, though it may lag in technological capabilities related to hydrogen-methanol integration. While competitors benefit from broader revenue streams, Methanex's competitive edge in methanol-specific operational execution and strategic focus ensures supply reliability. However, its reliance on methanol commodity prices remains a vulnerability, potentially impacting cash flow during market downturns. This exposure could be amplified by indirect competitors offering alternative fuels, such as biofuels or green hydrogen, which could erode market share if they become substantially cheaper or more environmentally friendly.

Despite these dynamics, Methanex's management believes the methanol industry is "not an overbuilt industry" and is "in a very healthy industry when it comes to supply and demand balances." This contrasts with some chemical peers and suggests a more favorable supply-demand equilibrium. The company's ability to maintain premiums over the marginal cost of production, even with increased competition leading to higher discounts in the Atlantic Basin, underscores its market positioning. The company's strategic acquisition of OCI Global's methanol business, which shifted 65% of its production to North America, further solidifies its position by providing access to stable and economic natural gas feedstock, a critical input for methanol production.

Operational Resilience and Strategic Expansion

Methanex's operational strategy is centered on maximizing the reliability and efficiency of its global production assets while strategically expanding its footprint. The successful acquisition of OCI Global's methanol business on June 27, 2025, was a transformative event, adding two world-scale methanol facilities in Beaumont, Texas. This acquisition is expected to yield $30 million in "hard synergies" within 18 months, primarily from optimizing logistics, SG&A, insurance, tax, and IT costs. The newly acquired Beaumont and Natgasoline facilities have operated safely and at full rates since the acquisition, demonstrating a seamless integration.

Operational challenges, such as an unplanned outage at the Geismar 3 (G3) plant in February 2025, were met with decisive action. Methanex successfully restarted G3 by early May 2025, after implementing revised startup conditions and repairs to the autothermal reformer, with management expressing confidence in the plant's long-term reliability. This commitment to operational stability is crucial for Methanex's production targets. The company's expected equity production guidance for 2025 is approximately 8 million tonnes, including the fully owned Beaumont facility (methanol and ammonia production) and its share of the Natgasoline plant. This figure reflects a dynamic global operating environment, including gas curtailments in Egypt that impacted Q1 2025 production and are expected to continue seasonally.

Financial Performance: A Foundation for Growth

Methanex's financial performance reflects its strategic adjustments and market conditions. In Q2 2025, the company reported Adjusted EBITDA of $183 million, primarily influenced by an average realized price of $374 per tonne and produced sales of approximately 1.5 million tons. This followed a strong Q1 2025, where Adjusted EBITDA reached $248 million, driven by a higher average realized price of $404 per ton and produced sales of approximately 1.7 million tons. For the full year 2024, Methanex generated Adjusted EBITDA of $764 million on an average realized price of $355 and produced sales exceeding 6 million tons.

The company's liquidity remains robust, with $485 million in cash (Methanex's share) as of Q2 2025, including approximately $50 million from the OCI transaction. Access to an undrawn revolving credit facility, upsized to $600 million post-OCI acquisition, further enhances its financial flexibility.

Methanex's TTM financial ratios indicate a Gross Profit Margin of 21.90%, an Operating Profit Margin of 14.93%, and an EBITDA Margin of 27.26%, demonstrating solid profitability within its sector. The Debt/Equity Ratio of 1.43 and a Current Ratio of 2.13 suggest a manageable debt load and healthy short-term liquidity.

Outlook and Capital Allocation: Deleveraging for Future Returns

Methanex's forward-looking strategy is anchored by a clear capital allocation framework. The immediate priority for the second half of 2025 is to direct all free cash flow towards deleveraging, specifically through the repayment of the Term Loan A facility. The company aims to return to its pre-OCI deal leverage levels by repaying $550 million to $600 million in debt over the next 18 months, assuming a $350 per ton realized methanol price, targeting a 2.5 times debt to adjusted EBITDA ratio.

This disciplined approach underscores a commitment to maintaining a strong balance sheet, with no significant growth capital anticipated over the next few years.

The outlook for methanol demand remains positive. Global methanol demand was estimated to be about 4% higher in Q2 2025 compared to Q1, primarily driven by increased demand in China across all applications. Management expects demand to grow at a similar rate to 2024, with traditional chemical and energy applications leading the way, and methanol-to-olefins (MTO) operating rates playing a crucial balancing role. Beyond 2025, Methanex anticipates favorable supply and demand dynamics, with demand expected to outpace limited projected capacity additions in the industry. Pricing expectations for Q3 2025 indicate an estimated realized price range between $335 and $345 per ton for July and August, with the marginal cost of production in China estimated at $270 to $290 per tonne.

Methanex's North American gas hedging strategy targets 50% to 70% hedging in the first three years, providing cost certainty. The longer end of the forward curve for natural gas is pricing down, with some small hedging opportunities identified in the 2030+ range at below $3.50 all-in cost, which is positive for Methanex's long-term cost structure. While the immediate focus is on deleveraging, management maintains that with strong free cash flow, they are "positioned to execute a balanced approach that includes deleveraging and shareholder distributions, depending on future market conditions and methanol pricing."

Risks and Considerations

Despite a compelling investment thesis, Methanex faces several pertinent risks. Geopolitical conflicts and sanctions, particularly concerning Iranian methanol production, remain a factor. While Iran has historically found ways to circumvent sanctions, any escalation could impact trade flows and pricing, though Methanex does not currently forecast significant changes to overall balances. Natural gas supply constraints, especially in New Zealand and Egypt, pose ongoing operational challenges, leading to reduced production and potential curtailments.

The impact of potential tariffs on global economic activity is another area of close monitoring. While direct impacts on Methanex's business from U.S. tariffs are currently marginal, a broader economic slowdown could affect methanol demand, particularly in China's export manufacturing sector. Operational challenges, such as those previously experienced with Geismar 3, highlight the complexities of managing large-scale chemical plants, though Methanex has demonstrated its ability to address these effectively. Finally, the ammonia business, a new segment acquired with OCI Global , is still in its early stages for Methanex, and its long-term outlook and contribution to the company's performance will require further integration and understanding.

Conclusion

Methanex Corporation is at a pivotal juncture, solidifying its leadership in the global methanol market while strategically expanding into the burgeoning marine energy transition. The transformative acquisition of OCI Global's (OCI) methanol business, coupled with robust operational performance from its Geismar 3 plant and increased output from Chile, underpins a strong production outlook for 2025. The company's disciplined capital allocation strategy, prioritizing deleveraging post-acquisition, aims to fortify its financial foundation, paving the way for future shareholder distributions.

Methanex's technological edge in methanol bunkering positions it as a key enabler of maritime decarbonization, capitalizing on the anticipated sharp rise in demand for low-carbon methanol. While facing competitive pressures and regional supply challenges, the company's focused expertise, global supply chain, and proactive management of its asset base allow it to maintain a resilient market position. Investors should recognize Methanex's strategic commitment to both core methanol production and emerging low-carbon solutions, supported by a clear financial roadmap, as central to its long-term value proposition.