Methanol markets have stabilised – Methanex CEO

29 April 2009 18:56  [Source: ICIS news]

TORONTO (ICIS news)--Methanol industry conditions have stabilised after worsening in the 2008 fourth quarter, with some signs of recovery going forward, the CEO of Methanex, the world’s largest methanol producer, said on Wednesday.

Bruce Aitken said demand in China and other areas in Asia-Pacific showed some improvement while demand in other regions remained stable.

Imports into China had continued to escalate, reaching an annualised 6.5m tonnes during the first quarter, he said in briefing analysts on the company’s first-quarter net loss of $18.4m (€13.9m).

During the quarter, high-cost industry capacity had remained down or was running at low levels, helping to bring some stability to the market, he said.

Methanol prices remained “reasonably stable” since the beginning of the year, he said, adding Methanex’s average methanol price was $216/tonne during the quarter.

Among the challenges facing Methanex were its operations in Chile after Argentina curtailed its gas supplies to that country, Aitken said.

The company was currently operating only one of its four plants in Chile, translating into an overall capacity utilisation there of only 30%.

The plant was running on gas supplied exclusively from Chile, Aitken said.

Methanex expected to restart a second plant in Chile late this year, after the end of the winter season in the southern hemisphere. That would bring Chile production to around 3,500-3,600 tonnes/day.

However, Methanex was encouraged by the potential for additional natural gas availability in southern Chile and was optimistic about returning all its plants there to full operation over the next few years.

Meanwhile, Methanex’s new plant in Egypt was over 80% complete, with start-up scheduled for early 2010, Aitken said.

Aitken, responding to analysts' questions, ruled out that the Vancouver-based producer would raise its dividend in the near-term.

He cited the current tough financial market conditions and the company's need to fund investments and projects.

“It would be very difficult for us to raise a bond today, or to borrow from the banks,” he said.

Asked about reports of a possible project in Vietnam, Aitken said this was “at a very early stage.” A second plant in Egypt was more likely than a grassroots project in Vietnam, he said.

($1 =  €0.76)

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By: Stefan Baumgarten
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