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Methanex Inks Natural Gas Supply Deals for Chile Operations

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Methanex Corporation (MEOH - Free Report) has signed natural gas supply agreements with Total Austral SA, Wintershall Energia SA, Pan American Sur SA and Compania General de Combustibles SA for its Chile operations through Jun 1, 2020. These agreements are subject to gas availability in Argentina as well as export permits for gas suppliers from the Argentine Government.

Methanex is optimistic about the export permits. These agreements, which when combined with existing contracts from other gas suppliers, will allow the company for up to a maximum 75% of a two-plant operation annually in Chile and a two-plant operation in the country during summer months in the Southern Hemisphere.

Shares of Methanex have gained 63.1% over a year, outperforming the industry’s rise of 5.8%.

Strong demand and pricing fundamentals for methanol have contributed to the run up in Methanex’s shares. Demand has been driven by both traditional derivatives and energy-related applications in Asia, particularly China. Per the company, global demand for methanol increased 4% year over year in the second quarter and is expected to remain healthy in 2018.

Meanwhile, Methanex’s Chile IV plant is proceeding with its restart process, which is expected to be complete by the end of third-quarter 2018. With a committed revolving credit facility, strong balance sheet and healthy cash generation capability, the company believes that it is well positioned to meet its financial commitments, execute opportunities and return excess cash to shareholders through dividends and share repurchases.

Methanex Corporation Price and Consensus

 

Zacks Rank & Stocks to Consider

Methanex currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Huntsman Corporation (HUN - Free Report) , Celanese Corporation (CE - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) .

Huntsman has an expected long-term earnings growth rate of 8.5% and a Zacks Rank #1 (Strong Buy). The company’s shares have risen 24.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese has an expected long-term earnings growth rate of 10% and carries a Zacks Rank #1. The stock has rallied 18.3% in a year.

Air Products has an expected long-term earnings growth rate of 16.1% and a Zacks Rank #2 (Buy). Its shares have gained 10.6% in a year’s time.

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