Methanex (NASDAQ:MEOH) reported fourth-quarter 2025 results that reflected lower pricing and the impact of plant outages, while management said recent escalation in the Middle East has introduced significant uncertainty to global methanol supply and has already lifted spot prices across major regions.
Fourth-quarter results and safety performance
President and CEO Rich Sumner opened the call by highlighting the company’s focus on safety, stating Methanex delivered its best two-year safety performance in company history over 2024 and 2025 despite “significant changes to our asset portfolio and supply chain.” Sumner said the company recorded zero Tier 1 process safety incidents over the past two years and recordable injury rates of 0.09 and 0.12 per 200,000 hours worked in 2024 and 2025, respectively, compared with a chemical industry average of 0.59 in 2024.
Market conditions: China demand, Iran supply, and Middle East escalation
Sumner said Methanex was monitoring current events in the Middle East and their impact on global markets. Looking back at the fourth quarter, the company estimated global demand increased about 4% in China, while demand outside China was “relatively flat.” He attributed stronger China demand to increased methanol use in energy applications and higher operating rates at Methanol-to-Olefins (MTO) producers, which he said were supported by high operating rates and import availability from Iran.
However, Sumner said steady Iranian imports in October and November contributed to higher coastal inventories in China and pushed pricing toward the $250 per metric ton range. Toward the end of the quarter, Methanex believed seasonal gas constraints significantly reduced Iranian output, and MTO producers reduced operating rates as supply tightened.
For the first quarter of 2026, Sumner said realized pricing had been “quite stable” with small increases on slightly tighter supply conditions prior to the latest escalation. After considering posted prices and higher discounts tied to 2026 recontracting, the company estimated first-quarter average realized price of $330 to $340 per ton.
Management said the Middle East escalation has increased uncertainty around supply reliability from the region. Sumner said Methanex is seeing “significantly reduced methanol supply from Iran,” and believes other producers’ operations and trade flows are also being affected. He said the disruption has driven an increase in spot methanol pricing, with China trading above $300 per metric ton and European spot prices near $400 per ton.
During Q&A, Sumner characterized the disruption as meaningful given the size of the globally traded market. He cited an internationally traded methanol market of about 55 million tons, and discussed the magnitude of supply potentially affected from Iran and other Middle East producers. He said Iranian supply largely flows to China, while other Middle East volumes typically serve Asia-Pacific and some Europe, and indicated those trade flows had stopped. He added that the duration of disruptions would influence how quickly inventories are drawn down and whether customers ultimately curtail operations.
Operational update by region and 2026 production outlook
Methanex said methanol production increased in the fourth quarter compared with the third quarter. Sumner provided updates across the portfolio, including the newly acquired Texas assets:
- Texas (Beaumont and Natgasoline): Methanex produced 216,000 tons at Beaumont and 186,000 tons as its equity share from Natgasoline. Beaumont had a short unplanned outage, while Natgasoline completed a planned 10-day outage for a catalyst replacement tied to environmental compliance. Management said integration work is progressing, including detailed system and technical reviews.
- Geismar: Production was slightly higher as all three plants “operated reasonably well,” though minor unplanned outages occurred. In later comments, Sumner said the company had moved past prior ATR-related challenges and described the asset as running with “really good stable production.”
- Chile: Following a planned turnaround in September, both plants operated at full rates for most of the quarter using gas from Chile and Argentina. A third-party pipeline failure in December temporarily restricted gas supply and led to roughly 75,000 tons of lost production. Sumner said the issue was resolved in early 2026, and both plants are operating at full rates with expectations to sustain that through April.
- Egypt: Production improved versus the third quarter, which had seasonal gas constraints. Sumner said regional gas balances stabilized, though continued limitations on supply to industrial plants are expected, particularly in summer. The plant is operating at full rates, and Methanex is monitoring regional conditions.
- New Zealand: Production was 171,000 tons as more gas was available outside the winter season. Sumner said structural gas availability remains challenging and the company is working with suppliers and the government to optimize operations.
For 2026, Methanex guided to expected equity production of approximately 9 million tons, noting quarterly variation could occur due to turnarounds, gas availability, outages, and other events. In response to an analyst question, Sumner provided rough regional/asset color embedded in the outlook, including about “six or a little over” 6 million tons in North America, 1.3 to 1.4 million tons for Chile, 0.5 to 0.6 million tons for Egypt (less than an 80% operating rate), around 800,000 tons from one Trinidad plant (Titan), and less than half a million tons in New Zealand.
Costs, integration progress, and balance sheet priorities
Addressing elevated costs, Sumner said fourth-quarter results reflected “unabsorbed costs” tied to outages in December, which caused immediate fixed-cost recognition in the income statement. He said the company expects fixed costs to come down, and noted ocean freight reflected a longer supply chain in the third and fourth quarters. He also said Methanex is still moving through the OCI transaction process and is spending integration-related costs to drive synergies, which are expected to be realized over 2026 with fixed cost structure adjustments anticipated beginning in 2027.
On the OCI integration, Sumner said the acquired assets have been operating above the company’s initial modeled operating-rate assumptions of 85% to 90%, though the quarter included downtime at Natgasoline for proactive environmental compliance work and minor downtime at Beaumont. He reiterated a target of about $30 million in synergies to be realized by the end of 2026, with benefits expected as the company moves into 2027, while noting integration can also bring higher costs in the interim.
Methanex ended 2025 with $425 million in cash after repaying $75 million of its Term Loan A facility in the fourth quarter. Since the start of 2026, the company repaid an additional $50 million, bringing the Term Loan A balance to $300 million. Sumner said the company’s near-term capital allocation priority is to direct all free cash flow toward Term Loan A repayment, and he reiterated during Q&A that deleveraging remains the first priority even if market tightness lifts cash flow.
First-quarter 2026 outlook and contract pricing cadence
Based on the forecasted first-quarter average realized price of $330 to $340 per ton and similar produced sales volumes, Methanex expects “slightly higher” Adjusted EBITDA in the first quarter of 2026 compared with the fourth quarter.
Management also discussed how pricing flows through under its term contract model. Sumner said Methanex resets prices monthly, and while March sales reflect contracted pricing, the company would expect resetting into April to reflect market conditions. He said the company’s first priority during the current disruption is security of supply to customers, while also monitoring potential demand impacts and broader market volatility.
About Methanex (NASDAQ:MEOH)
Methanex Corporation is a Vancouver, Canada–based company and one of the world’s largest producers and suppliers of methanol. The company manufactures methanol, a key feedstock for a wide range of chemical products and industrial applications. Methanex markets its product to customers in energy, plastics, paints and coatings, and various chemical sectors, positioning the company as a critical link in the global supply chain for basic chemicals.
The company’s core product, methanol, serves as a building block for downstream chemicals such as formaldehyde, acetic acid and methyl tertiary butyl ether (MTBE).
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