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Methanex (MEOH) Offers Updates on Geismar G3 Methanol Plant

Methanex Corporation MEOH has said that commercial production of its new 1.8 million ton methanol facility, Geismar 3 (G3) in Louisiana, has been delayed owing to issues with the autothermal reformer (ATR) during the last stages of the first start-up process. This issue necessitated cooling the ATR and bringing it to a safe level so that teams could do thorough examinations of the vessel.

It has been discovered after preliminary examinations that many of the vessel's supporting refractory bricks have substantial damage and will need to be replaced. The custom-shaped refractory bricks take longer to procure, therefore, management expects commercial production to be delayed through the end of the third quarter of 2024.

The investigation and planning to resolve the issue are underway, and management is looking into all options to expedite the repair time. According to the preliminary findings of its root cause analysis, management feels that this issue is related to complications during the initial start-up procedure rather than a plant design or construction issue. Management estimates that the total capital cost will not considerably exceed the higher end of the $1.3 billion capital cost guidance.

Shares of Methanex have lost 12.2% over the past year compared with a 16.5% decline of its industry.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The company, on its fourth-quarter call, said that it projects that with the start of Geismar 3, production in 2024 will surpass 2023’s figure by roughly 8.1 million tons. The 2024 production projection is based on the midpoint of Chile and New Zealand guidance, with G3 ramping up through February, Egypt restarting in the first half of February and all other plants operating at full capacity. Quarterly production may vary depending on turnaround timing, gas supply, unforeseen outages and unanticipated events.

Methanex Corporation Price and Consensus

Methanex Corporation price-consensus-chart | Methanex Corporation Quote

Zacks Rank & Key Picks

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

Better-ranked stocks in the basic materials space include United States Steel Corporation X, Carpenter Technology Corporation CRS and Alpha Metallurgical Resources Inc. AMR.

United States Steel carrying a Zacks Rank #1 (Strong Buy). X beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 54.8%. The company’s shares have soared 61.5% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carpenter Technology currently carries a Zacks Rank #1. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have soared 34.6% in the past year.

The Zacks Consensus Estimate for AMR’s current-year earnings has been revised upward by 69% in the past 60 days. It currently carries a Zacks Rank #1.  AMR delivered a trailing four-quarter earnings surprise of roughly 9.6%, on average. AMR shares are up around 120.1% in a year.

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