Methanex to Idle New Zealand Production Facilities Amid Gas Shortage

Methanex Corporation MEOH has announced an agreement to sell substantially all of its New Zealand natural gas contractual entitlements beginning in the first quarter of 2027 and continuing through the end of the decade, when the entitlements expire. The decision follows a prolonged decline in domestic natural gas availability in New Zealand and the lack of a clear pathway for meaningful new supply. 

The company plans to work with employees, contractors, suppliers, customers and government stakeholders throughout the transition 

Per MEOH, the facilities have operated for more than four decades and have historically contributed to its global production network. The company had been preparing for the eventual decline in New Zealand gas availability for several years and had actively managed its operations to match available supply.  

Methanex added that the immediate focus is on supporting employees and other stakeholders, safely operating the facilities over the coming months and then safely idling and preserving the assets. Methanex intends to maintain long-term optionality for a potential restart should future gas supply conditions improve sufficiently to support economically viable operations. 

The decision is expected to have limited near-term cash cost implications, as Methanex does not expect to incur material cash costs from idling the facilities. However, the shutdown will reduce the company's production footprint and remove New Zealand as a source of methanol production from 2027 onward. 

Price Performance of MEOH

Shares of MEOH are up 70.3% over the past year compared with the industry’s 3.2% rise.

Image Source: Zacks Investment Research

MEOH’s Zacks Rank & Key Picks

MEOH carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Basic Materials space are Worthington Steel, Inc. WS, Carpenter Technology Corporation CRS and Avient Corporation AVNT. WS currently sports a Zacks Rank #1 (Strong Buy), while CRS and AVNT carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for WS’ current-year earnings is $3.4 per share, implying a 52.5% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, with the negative average surprise being 13.8%.

The Zacks Consensus Estimate for CRS’ fiscal current-year earnings is pegged at $13.28 per share, implying a 23.4% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 8.4%.

The Zacks Consensus Estimate for AVNT’s current-year earnings is pegged at $3.2 per share, indicating a 13.5% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 3.4%.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research