Methanex(US:MEOH)2021-07-30 05:44Financial Data and Key Metrics Changes - The average realized price increased to $376 per tonne, a $13 increase compared to the first quarter [7] - Adjusted EBITDA rose to $262 million, an increase of $20 million from the first quarter [7] - Adjusted net income was $95 million or $1.24 per share, up $13 million or $0.17 per share from the first quarter [7] Business Line Data and Key Metrics Changes - Production in New Zealand was lower due to reduced gas availability, with an estimated production of 1.4 million tonnes for 2021 [10][12] - Geismar's production increased due to the completion of a planned turnaround, with an annual operating capacity now at 2.2 million tonnes, a 10% increase [10] - Trinidad's production was higher than the first quarter, with an estimated production of 1.1 million tonnes for 2021 [11] - Chile's production was lower than the first quarter, with an estimated production of 800,000 to 900,000 tonnes for 2021 [12] Market Data and Key Metrics Changes - Global methanol demand increased by approximately 3% in the second quarter compared to the first quarter, expected to surpass pre-pandemic levels later this year [8] - Current methanol prices in August were $542 per tonne in North America and $420 per tonne in Asia Pacific [9] - The industry cost curve in China has increased to approximately $300 to $320 per tonne due to rising coal and natural gas prices [8] Company Strategy and Development Direction - The company announced the restart of construction on the Geismar 3 project, with a capital cost estimate of $1.25 billion to $1.35 billion [16] - The company aims to maintain financial flexibility, targeting a minimum of $300 million in cash on hand and reducing debt levels over time [17] - The company plans to increase shareholder distributions through share buybacks and dividends when methanol prices reach approximately $325 per tonne or higher [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the methanol market, citing strong demand and low inventory levels [8] - The company expects third-quarter production and adjusted EBITDA results to be similar to the second quarter [18] - Management noted that global demand for methanol is expected to continue growing through the second half of the year [55] Other Important Information - The company has over $750 million in cash on its balance sheet and a strong financial position [14] - The company is committed to enhancing sustainability and ESG-related disclosures [19] Q&A Session Summary Question: Update on gas availability in Chile - Management indicated that gas availability in Argentina and Chile has improved, expecting both plants in Chile to operate by late third quarter or early fourth quarter [22][23] Question: Freight market impact - Management noted that liquid tanker rates are below average, and they expect higher prices to improve profitability [32] Question: Methanol unit operations at LyondellBasell - Management did not have specific information but mentioned that the unit was in a planned turnaround [35] Question: Demand growth forecast - Management expects demand to return to pre-pandemic levels later this year, with some applications still lagging [55] Question: Global shipping capacity for methanol - Management confirmed eight owned ships on order and expects more orders in the future, with significant demand from the industrial boiler market [68] Question: Liquidity and capital returns - Management reiterated their strategy to maintain cash reserves for G3 and return excess cash to shareholders flexibly [81] Question: Confidence in labor resources - Management expressed confidence in their labor capabilities, noting low turnover rates and a focus on diversity and inclusion [96]