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Another Plant Relocation by Methanex

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The world's largest producer of methanol, Methanex Corp. (MEOH - Free Report) , has announced that it will relocate another plant from Chile to Geismar, LA.
The cost involved is about $550 million and the plant is expected to come online by 2016. The first plant Geismar 1, which Methanex had shifted, has made very good progress and is proceeding on schedule and on budget.

The two plants at Geismar along with Methanex’s other growth initiatives in New Zealand and Medicine Hat, represent three million tons of additional operating capacity, which are expected to create significant value for shareholders.

Methanex believes that the global demand for methanol will exceed supply over the next few years and by shifting its second plant to Louisiana, it will benefit from the competitive natural gas price environment in North America. Moreover, Methanex expects to add additional molecules to its system to meet its customer’s growing needs for methanol.

Methanex believes that the methanol industry and its pricing environment would appear to be attractive in the longer term as global demand is expected to surpass new capacity additions.

Recently, Methanex released its first-quarter 2013 results. The company’s earnings of 63 cents per share for the quarter missed the Zacks Consensus Estimate of 68 cents, reflecting a negative surprise of around 7.4%.

The company posted a profit (attributable to shareholders) of $60 million in the reported quarter, up from $22 million recorded a year ago.
Revenues remained flat year over year at $651.9 million, missing the Zacks Consensus Estimate of $777 million. Sales volumes in the quarter totaled 1,831,000 tons, up 0.8% from the year-ago quarter.

Methanex retains a Zacks Rank #2 (Buy).

Other companies in the chemical industry that are worth considering include Shin-Etsu Chemical Co., Ltd. (SHECY - Free Report) , Celanese Corp. (CE - Free Report) and Eastman Chemical Co. (EMN - Free Report) . While Shin-Etsu Chemical retains a Zacks Rank #1 (Strong Buy), Celanese and Eastman Chemical carry a Zacks Rank #2 (Buy).

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