Methanex Q3 may drop, Chile woes feared - RBC

22 October 2007 20:45  [Source: ICIS news]

TORONTO (ICIS news)--Methanex’s third-quarter profit will likely be below its second-quarter because of lower methanol prices and sales volumes, analysts said on Monday, adding they feared even higher natural gas costs for the company’s plants in Chile going forward.

 

A spokesperson at Methanex’s headquarters in Vancouver, British Columbia, was not immediately available for comment on Monday afternoon.

 

Canada’s RBC Capital Markets forecasts Methanex’s earnings per share (EPS) at 26 cents for the three months ended 30 September, down from 31 cents in the 2007 second quarter, it said in a research note.

 

The bank expects Methanex’s average realised methanol price at $266/tonne for the third quarter, down from $285 in the second quarter, it said.

 

In a separate note released last Friday, RBC also said Methanex may soon face even higher prices for Argentine natural gas supplies to its Chile production complex.

 

Bolivia had increased its price of natural gas exports to Argentina to $6.01/m Btu, from $5.08/m Btu and Argentina may eventually increase its duty on natural gas exports to Chile to recover the higher cost of gas from Bolivia, the analysts said.

 

Last year, Argentina’s government had already sharply increased the duty on exports of natural gas from Argentina to Chile, RBC added.

 

Bolivia has South America's second-largest natural gas reserves and it produces about 1.4 billion cubic feet/day (bcf/d), of which about 20% is exported to Argentina, according to the analysts.

 

Methanex’s four methanol plants in Chile have experienced many disruptions of gas supplies from Argentina in past years, forcing the company to curtail production.

 

The company is due to report its third-quarter results on 24 October and hold a conference call on 25 October at which time it is expected to provide more insight on the natural gas supply situation in Chile, RBC said.

 

Company officials approached by ICIS news last week on the sidelines of the 2007 Methanol Forum in Toronto had declined to provide an update.

 

Methanex’s share price was down 1.14%, at $26.80, in Monday afternoon trading in New York.

By: Stefan Baumgarten
+1 713 525 2653

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