20 September 2012 18:09 [Source: ICIS news]
Methanex said the 1.3m tonne/year plant in Damietta has not operated in September after shutting down in late August.
Egypt has had an unusually hot summer, with electricity shortages and rolling brown-outs that have forced the government to divert gas from the industrial complex, according to Methanex.
A Methanex executive said the plant’s gas provider, Egypt National Gas (EGAS), could not provide the company with a restart date.
Michael Macdonald, Methanex's senior vice president of global operations, said earlier this week in a conference call that another factor complicating the plant’s restart is the political situation in Egypt.
Violent protests in Egypt in 2011 led to the overthrow of former president Hosni Mubarak in what became known as the “Arab spring,” which reverberated throughout the Middle East.
“It’s a very uncertain time in Egypt right now with transition after the revolution,” Macdonald said. “Turning the lights out in Cairo probably isn’t advisable for the government at this time.”
US spot barge prices have jumped to 114 cents/gal this week from 111 cents/gal a week ago, according to methanol sources.
Methanex analyst Steve Hansen at Raymond James issued a report on Thursday reducing the target price for the company’s stock to $31 (€24) from $32, to account for the additional uncertainty from the Egypt shutdown.
“Egypt’s volatile geopolitical environment, creeping bureaucratic paralysis and antiquated infrastructure have collectively forged a toxic operating environment for Methanex in recent months,” Hansen said.
Methanex’s NYSE-listed stock (MEOH) traded on Thursday at $27.75/share, down from Wednesday’s close at $28.13. Methanex shares hit a high of $30.12 on 10 September.
In Europe, a Methanex official said there would be no interruptions to customers of the Egypt plant and no risk of force majeure. The official said Methanex also went ahead with a rollover for its fourth-quarter contract price at €340/tonne FOB (free on board) Rotterdam.
“We didn’t want to take advantage of this situation,” the official said.
($1 = €0.77)
Additional reporting by Ross Yeo
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