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Methanex to Idle Chile Plant

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Methanex Corporation (MEOH - Free Report) has announced its decision to idle its operations in Chile in March due to lack of adequate natural gas supply. The company stated that it does not have sufficient feedstock to keep the plant in operation given the natural gas supply challenges.

The company is operating one plant in Chile at low operating rates and it expects the plant to produce less than 5% of its entire output in 2013.

Methanex released its third-quarter 2012 results in October 2012. The company reported adjusted earnings of 38 cents per share in the quarter compared with 43 cents per share registered in the same period last year. The results surpassed the Zacks Consensus Estimate of 30 cents, reflecting a positive surprise of around 26.7%.

Revenues dipped 2.1% year over year to $655.3 million, missing the Zacks Consensus Estimate of $659 million. Sales volumes in the quarter totaled 1,899 million tons, up 0.5% from the year-ago quarter.

With the continued initiatives to increase production in New Zealand and Medicine Hat units and progress in the Louisiana project, the company has the potential to increase its operating capacity by nearly 2 million tons over the next two years, which in turn will contribute in cash generation. The company, in November 2012, received the necessary air permits from the State of Louisiana and the Environmental Protection Agency to build and operate its one million ton-methanol project in Louisiana.

The company believes that its healthy financial position, strong global supply network and competitive-cost position will strengthen its position as the global leader in the methanol industry and enable it to continue to deliver incremental returns to shareholders.

Methanex, which faces stiff competition from Celanese Corp. (CE - Free Report) and Eastman Chemical Co. (EMN - Free Report) , retains a short-term (1 to 3 months) Zacks Rank #4 (Sell). We currently have a long-term (more than 6 months) Neutral recommendation on the stock.

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