MEOH - Earnings call transcript Q2 2022

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Operator

Welcome to the Methanex Corporation Q2 2022 Earnings Call. I would now like to turn the conference call over to Ms. Sarah Herriott. Please go ahead.

Sarah Herriott

Good morning everyone. quarter conference second our to XXXX call. results Welcome

to on release, and accessed XXXX would or analysis, XXXX or Relations the second financial comment like would and future discussion report news quarter today's I annual page drawing regarding Investor listeners the It policy be more today Our its listeners projections, the like in your to as the our our forward-looking and may to subject information. guidance of risks were outcome. remind effective methanex.com. to uncertainties included that our that caution for or forecast also are management's statements tab projections our to may forward-looking quarter is questions the comments and from date. that the provided information. in of nature, contain website our any between quarters. our the making to differ stated at Certain Reports I material on financial outcome is to MD&A cause today factors actual answers update This which materially from refer are assumptions information, information. by XXXX conclusions can this performance applied Methanex's Please not or second and our

economic our reflects Waterfront XX.X% income, Egypt facility, flow, clarification, the earnings For our interest EBITDA, XX% XX% price, in per today's any economic economic in references facility, to or our adjusted adjusted remarks in made realized EBITDA, cash the revenue, and Shipping. adjusted interest average share Atlas in interest

do on by certain compensation exclude covering unlikely have way EBITDA this turn items any meaning therefore, presented estimates are with and this identified comments over items by and a measures measures non-GAAP events. ratios the our prescribed of to standardized the report report call Mr. mark-to-market net to adjusted non-GAAP we President that similar other and CEO, of performance and adjusted income better measures question-and-answer be addition, these measure are operating report for because GAAP company to specific to not These in underlying associated comparable matter. impact now a to analysts his share-based they impact Floren their we We John and and like the companies. the encourage to believe period. would we I Methanex’s in and In

John Floren

will near-term discuss Good morning. that I is an the review quarterly to second and continuing a We'll hope our and XXXX announcement results, overview schedule quarter project remarks and our X stay we recent increase make operational share also few and healthy. the on markets, dividend. to review methanol the everyone safe the provide financial Today our outlook. our results, capital of of costs Geismar

questions. call up open then for the will We

costs United spot to a prices. adjusted of XX% of are natural Our States we higher the gas $X.XX average fuel target where assets, Adjusted economical. if gas to realized that or lower higher to Methanex-produced our rates bunker with of an gas to ton per needs I American natural coupled to price generated we sales because hedging in in EBITDA compared at everyone million becomes logistics $XXX remind of allow share. per and of North program for our and have place products, wanted due us EBITDA in plants minimal hedging run the adjusted income $XXX second gas quarter lower million higher the of first was $XX

XXXX. high Methanol-to-olefins Lunar target increased our the the the Global quarter quarter the closer XX% higher China. following ease offsets X% very of second in activity turnarounds well-positioned were Year our of significantly seasonal MTO to quarter hedge remain reverts Iran, prices. ethanol of prices to XX%. at supply as gas of Industry we or needs during current in slowdown plant the our lower Asia. production from compared with stock hedged year, rates partial from gas manufacturing XXXX, compared was the Next to After rebounded second in demand position and operating first New with the quarter applications constraints seasonal in and chemical with operating with traditional Southeast to plant rates improved Europe demand

amount the economic Coastal market we per result, the be lockdown lower tonne, China in curve the costs on a levels. were spot COVID methanol but regions. affirming in industry seen significant plant This few over in resulted in that sentiment an pressure ton. production producer from a China by and today's per in As in expect with in coal spot methanol the all to economic at in We've Our of pricing decreased posted China. based is of prices as in of risks in increase China American China slightly global markets prices and estimate marginal ton cost We $XXX under August availability to and weaker rates $XXX last globally. headwinds combined major per pricing reduction North operating remain $XX lower a saw other robust, pricing and above China, weeks Chinese

per to $XX $XXX prices tonne decreased Chinese $XX Asia-Pacific by $XXX respectively. and tonne, and and per

by this adjusted environment. to second lower growth than favorable We term quarterly, High economy. tonne. expected. for outlook and set methanol focus per on led low and we carbon growth Our XX% Entering €XXX XXXX vessels alternative quarter of even vessels decreased China shipping if transition prices competitiveness prices, fuel energy we and as medium a fuels, growth our tonne primarily which spot third can demand a quarter, demand price decarbonization supply rates a per dual are discounts stable Decreasing the against the estimate fuel third the be potential the to economic higher discount European continues in Methanol to year. per in remain million water rate cost market in contract methanol demand as as continue approximately that in uncertainty. GDP the to in we €XX years, see the global outpacing marine our pricing demand fuel growing run and price applications. quarter, We our is outlook a global on see despite in accelerate. and alternative the emerged to methanol enhanced industry tonnes energy dual has top represents Demand over next methanol of few that will the for X.X XX on

over new to continue currently with are of a We dozen vessel in grow. orders companies methanol to the number discussions expect shipping

quarter. quarter, and quarter Chile. first quarter in expected, production Our New to in typically in lower due than production second the quarters. the second impacting southern deliveries the levels and compared were Zealand lower third in lower lower gas the Chile, experienced second as In to hemisphere our production We first winter was the our months,

the to deliveries in quarter. gas expect higher We receive fourth

position liquidity. New We on cash, approximately we planned the emergent gas Zealand, Based quarter. ended year Field our for for resulted financial $XXX maintenance, with during Gas in are New million tonnes. X.X $XXX plants in guidance our strong which The restricted Zealand, due gas Maori metric in the million the to the second maintenance in million undrawn revised second [ph] weather backup at quarter natural lowering to which events download of availability May, in in in production had June extended the work to into lower and

balance by of tax cash Our and interest this payments. impacted was quarter timing the

Our not allocation disciplined has capital approach to changed.

GX upper XXXX of that capital narrow the pressures. project safely. begin and July focus I'm and and returning and an excellent progressing minimizing lower points, excess $XXX.X The of able cost of on added downward advantage cash review can this that impact and continue capital the to percentage has is derisking inflationary without and by we're risk, for guidance over band scheduled we've economic the fourth our have done inflationary growth progressing to executed The Construction pursuing job of completed project exceed our range to to quarter We business, by cost proud to methanol environment. of a maintaining while $XX the first team estimate undue three cost our updated cost value capital million shareholders. in opportunities our it's operations project that and team billion. be the the produce in

of spent have to quarter second $XXX approximately million end on the the GX. We

which We interest, fully expect hand. before approximately $XXX with million on cash costs is to $XXX capitalized now million remaining of capital funded

update emissions site increase Relations video by gas would it our the will overall capability generation dividend the capability of increase, cash significantly July, on those latest June, increase XX% the project a of GX Investor assets. enhance intensity. Board in shareholders For you generation to drone of that not have third the to to at able as our our reinforces to greenhouse of visit flow in approved our the to and dividend XX our Day see past next the portfolio the Early reduce I'm view cash quarter footage site. excited flow online encourage the fourth and to months. page highlights you year, strong were Investor This return our I in cash commitment our

year XXXX adjusted returning cash we our Our at will With our Meeting and prices shareholders. allocation our be to share fourth our methanol medium cash is cash of in excess July strong In posted will shareholders positive the lower coming questions. quarter share capability, our excess outlook in X Geismar in a growing any completed are flow growing to in the commitments September. continue Annual buyback EBITDA cash have completion term, program new planned the to next end on of GX General flow sustainable program and answer July dividend on earnings We'll a and upsized will around and quarter. project dividend of lower the and with we Based capital generation August, generation XXXX. buybacks. returning April evaluated now deliver market and be next and expect of for happy buyback to continue online We reviews we third we of in the after through the our the

Operator

Scotiabank. First from Instructions] Ben Isaacson from [Operator go Please ahead. you. question Thank is

Ben Isaacson

Thank you Good very much. John. morning,

I said quarter-over- was X% quarter, XQ that demand up was you think what right?

John Floren

correct That's Ben.

Ben Isaacson

And color kind the main buckets to how that balance the of Can little a of year? for terms you where of get more of going see in to X%? out the demand? bit methanol those just playing those do are buckets you maybe into And go

John Floren

my has Yes, strengths. predicting the future never been

the have all forecast for from have are So, in place. in any we But out present we our our seen the that -- wherever not we economic headwinds customers third quarter, certainly that and there. impact forecasts those

to continue where main than most in the a very the harder MTO really, tricky, and we're bounce QX predicting derivatives. at over QX, The the So, I we future increase a times. really for back chemical had think see time really, we is demand reason strong rates, traditional in operating demand

As chemical China in less we see you quarter, for usually in China. came the out applications lunar know, its of demand first traditional holiday,

Ben Isaacson

to And in with awards in I just in those fair follow-up is bid bid rounds from because Trinidad about on January upstream say round for then development probably Is year a won't Titan to there's that a anything may. I we if develop understand you question, and/or or separate? that due for how a likely hear April? it need that we Atlas see

John Floren

understand months. longer than should next that from we and think you for I that's is probably the round what water XX deep in what expect gas term bid

due and the to that economic coming clear, contracts to an have island and the I to of XX in aware to well same what do want very upstream to as period. be the due well the they we're to situation find think everybody as downstream most depend upstream to well the well. contracts government have the renegotiated survive do months in are The are to been has allows downstream government's the happen coming they that over Trinidad, the do on next

So, nothing's changed. really

government's everybody some very for want to it's think, in to going to clear play to time continue I Trinidad. this been take the more operate. they But itself out

stay to same still economics we're get our Titan cycle, at Titan. us the previous we'll for that something the So, positive be that but through cash as certainly deal won't at that optimistic allows

Ben Isaacson

Thanks much. so

John Floren

Thanks, Ben.

Operator

Please Markets. you. question BMO ahead. The Thank is Joel Capital next from Jackson from go

Joel Jackson

John. Hi, morning, good

John Floren

Morning,

Joel Jackson

a if and John, how of looks in left and $XXX,XXX like that you QX? came Zealand? New $XXX,XXX year reduction -- QX, right, production out This out than $XX,XXX terms attributable then go the versus see for production to expectations with more of QX, playing that in about in volume QX QX in do the that's

John Floren

QX, that's QX. of just some we've guidance that seen weather repair we tonnes. And New with extended to Yes, in down expect because in based we've Zealand, the continue Maui by into on adjusted work being additional and what XXX,XXX our outage

down and why that's methanol coming to our and we've guidance operate of million a availability times. season I adjusted The that's as QX for of QX better Iran So, and their as and winter X.X result in gas petrochemicals. having other out mentioned industry more mainly

Joel Jackson

Sorry.

Methanex, And impact, in would you you in then New it your -- you're production not QX? being like than QX? expecting QX your yourselves For Zealand own would anything see see lower sounds

John Floren

don't We a have production, year Joel. we first our three half. to turnarounds have that guide it the typically guide in We for didn't and on we two

So, specific numbers. but production give don't guidance we our on

Joel Jackson

The at may view you gas position, on Hub fact the differentials crazy, last government world it mean, Titan, have would -- dollars? you capital $XX right? gone on mean, which question be Henry know, How kind $XX, mean the Okay, should How Trinidad next world us crazy. gas BTTF a your my look thinking? the Like be, as this change days. want spreads? what does on where develop just I it next around short-term for what thinking short-term on hitting changing. like at is put contracts to is should I fact on your gas given you long-term crazy you you day is negotiating look methanol doing $XX, a it's that hedging? does market and is your of how anything, $XX, $XX, your for and Does your you given

John Floren

shape. whether by spot we're criticism, good a America, we those in pure I we money or in getting couple for money a were think have gas should those of quite really in needs six bought the hedges, on XX% the now years, we're our fixed had in quarters it's are of in lot. mean North and price out starred I hedges of happened of in what's and

is gas view input a our America have nobody So, future in that and fixed nothing's supply here $X.XX out, at is And or of to or because everywhere just we the gas outside these hard reasons gas. we with want really gas biggest have sharing pointed United $X when and predict. at Canada, thought that you for of our in are. North either was cost to our be changed in structure XX% States way the very cost the And it'd we away, hedged mechanisms firmed

gas with we're think with well-positioned other I year we're our QX, in cost really, the look price America it parts to world North in mechanism. So, I of XX% at really paying our the hedged gas next North was gas of similar the America. And when in and in average very sharing

energy done really we're we've us a think this that seeing. crisis good I in current job So, insulating from

Joel Jackson

Thanks, Okay. John.

Operator

Thank from is Please you. from Hansen James. The next question Raymond ahead. Steve go

Steve Hansen

so been where last any you're steering one for there has to tonnes the allocation the Yes, six regions, good little at some be and weighted shift is bit morning, price I'm global that's meaningful seems to suggest? John, in months how regions, towards around shifting your just first noting just that would or me a sales sort just mix math different average least, the the sales of guys. in of contract lower

John Floren

basis. I we really, supply mean, chain Not set on annual an Steve, our

that we all change So, our don't regularly. base customer

for last to the more of, within really the is at it and more. Russia, million now current as know calendar most to going year I'd material, than to next going they year, want looking previously. do and a X.X in imports the really China But over So, are amount of asking I looking what of We're are us change Europe, more product the process the say a customers we're year. Russian our bit don't in sell like in indicated into sell Russian suppliers deal marketing tonnes product Europe the team with from to doesn't are environment to

the but year, quarter more of a our second the this through about Asia, then try period, sell is year up. as given we're contracting in and of and any last in going Europe contracts I maybe go we think in to So, half come in

-- So, Basin, in $XX have especially quickly. the are to well. directionally, prices better are as much keep we a in ability so mind advantage product in we high, not much backs it's like to as just and to freight Atlantic net alone it's the that very where environment, keep that be would the the never the current as don't change, keep things fuel product as preference, our But freight product Atlantic the can

Steve Hansen

specifically I just reading just finally been structure, just as you update bit here monthly sense. down and the quarterly No, moving guess, to markets. Europe at which enter contract customers And road into dealing remember? of been some can contemplated contracts, makes course. long willing contracts that that your guys has I one in now point provides Have a follow-up the better, That more around is in timely as there for some to is we've future, with

John Floren

to Yes, we'd monthly Europe. to move love in

think the in on world, a quarter seems going I when forever all know, you're like price. volatility with is that you the setting

So, We for but sometimes able has lose long to think been you our successful. I just be preference haven't you sometimes time. a been monthly win,

be monthly So us, to very we'd to kind with want with that very move of customers welcome change.

Steve Hansen

color. the Appreciate great. Okay,

Operator

next Nelson The from is question you. Thank Please RBC. go from Ng ahead.

Nelson Ng

morning. Great. Thanks. And good

are for first full takes how reach at commissioning we after few longer? are So, year, question now a looking methanol facility GX, or can to relates generally to it just in you long next talk And guiding of production about months production? you first my to the QX for

John Floren

commissioned commission we've took GX weeks. were and plants they few the Well, GX last and

expecting been at to the our to the commission design is place when you job start turn you commissioning not align how how plant, place. commissioning. plant design a it, build plant he down for months and for we for on things going the fortunate you GX, in it did We're starts is that all really you on and that good GX the days well. that in but when go team disappointed And did it it, There's commissioning go our be apparent, outstanding plant have a and commissioning I'm expertise -- take may commission really, that GX, very do that have really experienced an So, doesn't we to you to to have plants. you commissioning if plant. gentleman a be fix a commissioning team it out, to And took we'd really some and and on when you few talented may that the that for

Nelson Ng

Okay, methanol so expect we should commissioning first QX? in full probably and sometime production

John Floren

sales we'll up that, and to mean, of through to weeks I the start in actual of that our the take will that anticipate product the a number our first plant starting commission plant and XXXX. part flow

Nelson Ng

Okay, logistics high headwind terms moving costs lag got just QX? obviously, moderate in oil to seeing Are outflows a costs, costs? and Or that a in over it. in is of logistics And prices your of bit the bunker then like one QX? there was fuel you into and

John Floren

for remind logistics exception our of set I'll waterfront with shipping fuel are so with Methanex. you, annually Yes, the costs,

And XXXX. end waterfront So, place of be those are renegotiated year. for with the the in there'll

with burning. So, to that on costs the Where is shipping fuel we're our do we're seen costs. really fixed higher we've

much ultra-low sulfur or the methanol that better diesel marine burn the gas economics than of ships or all So, oil. because on XXX% are running can methanol,

look all of because So no, its really over the went clean the which waterfront. far up liquid by you and basis tightened years. products, that race we've And advantage containers from the Ukraine, move -- I has running last We're spot carriers, would quite significantly, for methanol. few with Russia on that, the on with like got they rates petroleum the shipping markets war have other India, in liquid the of itself, dry that happened almost bulk that in really quite means fleet with shipping that's substantially. which half is product a us up what's up benefited And market China, the like gone with rates never at not farther impacted a to negotiated looking be paying to market Asia, really our

the -- the so prices not our a only ships, running have year. we have we do fixed methanol on So in benefit of but for these of our having benefit shipping

product we're in the right good even we on a do, much carry the is advantage the higher to for take ships really our products. not we're now backhaul of we petroleum rate that clean all methanol, that getting So that position a one-third of

So, get a revenue additional this. we like in that market that

on our shipping well-positioned really side. we're So,

Nelson Ng

the due Okay, mainly so logistics seen QX costs of terms to costs costs? just fuel methanol QX, higher to in was that versus clarify in higher that

John Floren

Well, outages, in environment exasperated on year-over-year, if time every a so for optimizer and higher little year, where on on where where product based fuel, gets supply saw bit we fuel costs the think an we -- quarter. quarter we look last send the this chain higher global based and right, you that's what it paying quarter you're

Nelson Ng

finally just you next year year, is you're are QX? then months hedges, hedged for Or XX this thereafter, the that you how hedged XX% the starting the you and year? next it when of rest And XX% next for say Okay. mentioned on

John Floren

XX% XXXX, hedged. For at we're

we're fixed priced. For hedged XX% or XXXX,

Nelson Ng

it. got Okay,

like perspective? -- costs American and think XX% of we in perspective, gas it from production spot of that think a should the look the the production taking from we at should terms plugging to So, price for in so of North gas in change

John Floren

at North to makes to the to China, than make China, yes. choose make run to more then we If rates, But XX%. sense it go it that America ship product we'd buy have decision. to it full and down to ability we'll If in

than rates, assuming higher for to rates. at not -- be XX% for run spot gas a go do minimum going hedged, proxy we're but the price to minimum gas would the that's not good we if So, that's

Nelson Ng

it sense. Okay, there. that leave I'll makes

Operator

Please TPH. Thank you. Blair [Operator from The Instructions] next go from ahead. question Matthew is

Matthew Blair

good in demand sense back locked have was a is played a a China improvement might taking of do I actually pretty …for how Circling the due role my is, like number, to lock have which QX? muted to seemed what China getting down X% X%, I'm downs? guess And much you here quarter-over-quarter question. that

John Floren

Yes.

Our really if you're X%, Mtbe, XXX than on, for traveling have COVID would impact didn't so. view fuels grown you're the when getting that more the driving down, not in your demand in locked lock car have is China downs, is like and

And so have our didn't view have growth during lock was, the the we we COVID additional would if in quarter, probably China. seen downs demand

Matthew Blair

there. Great, Thank Thank you. you. I'll leave it

John Floren

Thank you.

Operator

next The is from go ahead. you. question Thank Josh Spector from UBS. Please

Josh Spector

Yes. we to weighted Hi. sequentially contract for at your XX% Pricing question. discount my in pricing Thanks normally it taking was looked more about Maybe around quarter, that's realized guess, similar. XX%. your I when the be posted price. appears average to

So, Or anything consider? you selling? the that of discount else you're there that of about driver is what mix into would what next Is that? more to think was where And quarter?

John Floren

adjusted than China seen caused faster in QX increase. to QX, Yes. price, discounts contract happen pricing spot rebound stay quite to in in even we've to market. that was meant Well, mainly guide that overnight, we another discount XX%. quite nicely Hard predict here, what's going And spot was rapidly, XX%, by falling China's to significant our the prices which we competitive

So impact spot a the does, what does our price of be discount. which it'll factor Chinese will

back nicely. spot this markets the regions but to difficult have to and in bounced -- markets China environment, certainly two predict in other So, in last weeks other again, week

Josh Spector

of really matter Or so other And methanol point just pricing? gas there's global the is global, helpful. becomes capacity curious, that is for where curve, just a there far any at never driver? excess Europe much so meaningful That's Thanks. the Okay. economics end

John Floren

Europe, methanol shut in an It matters production have down today, because economical. you that's

methanol, and sell of got it in demand Norway, you've the gas And producers in methanol, a market. the there Europe as make the for well. got into European ability take You've to the or LNG big

environment and So taking sense in gas it selling making LNG methanol than makes at more time. be to for $XXX lot and making a today's a making

trying really unlikely think, demand. new to you're would overall for this getting difficult year allow our or investment. to But or So maybe it yes, plant economic energy good high would business, good because a environment XX I that in a you probably very get to new very gas build environment, is a started make be plant for

So And our anybody's we've on cost months and yes, interesting next I lasts position. for in how we're like the going it what's well question. longer, positioned that long really really it's locked is said, XX

the want and I naked today wouldn't it sell on economical. bucks methanol be very to So make markets at and gas try wouldn't it be time to XXX a

So, see and we'll we're well positioned things unfold. how

Josh Spector

it. you. Got Thank

Operator

next Thank Jefferies. ahead. question Please Laurence Alexander from from you. The go is

Laurence Alexander

in around a given secondly, how could conversion methanol? is industrial term? And the to two be markets new large medium strategy quick and just in in ones. the some affected the customers marine domain the how you volatility marine give feedstock prices perspective Can affecting, thinking the boiler how discussion Chinese about Hello, on are gas incentivizing volatility the construction is the how plant

John Floren

Yes.

provided ships. forth of vehicle asking methanol I'm underpin fuel share these flex today operation fuel such So to alloy -- plans their marine mayors think number of a, diesel projects. run I'm buy regulations letters stuck into a or to to one, fuel, switch of to a methanol them with or of intent bunch to signing use green to the are arrangements with FID. To aware of of that NGO. allows them underpin my of None type needed back And one sulfur able diesel, reason that environmental I the come to so made going any customer methanol, commercial their a have aware construction. None the not and have that's under pricing them be gas have are none be those they'll them of in fuel, from to ultra-low oil, knowledge, flex not that's they're is flex of investments. marine

of aware at it for just sorry, And not question So time. repeat Laurence second me. the was anything, this

Laurence Alexander

Sorry, on boiler the industrial strategy. Chinese

John Floren

developments RMB of always concerns there. more gas X,XXX tonne, per coast. or environmental been by price in makes to methanol driven on certainly natural high continuing And China, the And economics the in it's see Yes. diesel. We're coal even attractive versus

methanol for are are So still the more gas. diesel those natural environmental much or there. than attractive concerns now economics And

would demand on if not replace klim I continue that positive the for from a but don't were saw see Olympics, ran So application but kiln you those ceramic new in we boilers, they methanol. kiln. which for coal know during in the [ph], only that for made methanol is uptake to little mascot, mascots newest

Laurence Alexander

Interesting. much. you Thank very

John Floren

Thank you.

Operator

Thank go from is Hassan you. Alembic a Please question Ahmed from next Global. The ahead.

Hassan Ahmed

John. morning, Good

John Floren

Good morning.

Hassan Ahmed

in wanted growth, think correctly, despite through ethylene down, environment demand revisit, of the hasn't locked to polyethylene John for just it, a questions X% tailwinds, around uptick sort sort been methanol methanol then of sort all bullish quite headwinds saw energy But guys this positive of the I'm easing things sounds and and crude again, negative, commentary obviously, demand to whole hearing oil have things the QX? a want in a of obviously pricing sequential your you demand of you the couple side great. bit positive if seems I the side of of well. as sustainability slash high price because growth, mean, China

side inventory saw in X%-ish it term? in in sequential sustainable? these with we fair factors growth near it is in whole where factor of the there's of least that thinking considered, to the sort near through uptick things term, assume demand now, all also, So at demand of And does that in, the sort

John Floren

it's Well, if tone demand, on bullish because need to change my sounding if uncertain. I'm I selling very I'm --

remind wasn't to them balance at quarter, add from continue our there, headwinds. are based when but our X.X So, got previous out, new operating tons there's that commissioned a I'll annualized rates demand. very we forecasts quarters. tailwinds, in today customers the full will MTO good being we in plant see, and be you million on we there And, which they're

I a a when real are get drop as in But, ships our demand. sure methanol have get all kind So quickly. bump, same you'd energy you you of COVID. all the through like where, all crisis well. it's below markets to if on quite could last have pricing derivatives high and double other the of traditional MTBE that'll And, demand downs recession, nice few in be around good the I'm environment not we that had XXXX, recession. see mentioned, we a in there's China to well. in we read But, that financial ships the XXX, rebound running about expect and saw are continues lock we no methanol headlines can crisis demand as see and a digit times chemical The oil shocks to grow as

relative MTL crackers idle and the the of to in plants expect we future. current are the in what drop our our And, that marketplace, of from whole seeing solid, demand you North digit, demand methanol. we're on predict from well, Asian and two outlook China expecting because to economics NAFTA, not we again, double chain there's rates be on And propylene as have the chain. dynamic have customers, price a well. reduced ethylene the understand I ability So can't in the as based some in restart the remind the quite still that of we the and But certainly their

MTO high be I at at in continues but into to we methanol affordability NAFTA methanol So okay, crackers. think and the prices, versus very something watched current that's closely running of rates, MTL

So, these else to demand is equal good be QX. what all in profile, a add dynamics think they going yes, everything forward really And pretty are complicated. up we

Hassan Ahmed

talking the pretty as methanol and material, methanol the out call and about a like. very it follow global shutdowns in some helpful. capacity obviously call use around Europe, of that capacity, insignificant but of Germany, producers not commentary XX% out dire, sitting about Europe. the it I it's sounds raw up of And methanol producers, The particularly right, an like have a I'm mean, of talking producers coming places, And polyurethanes not that Understood, as with there. amount like

of are are question operations some you side considering outsourcing really, the maybe to with is of conversations some initial downstream having So products of producers these like methanol that like polyurethanes the and you the that, guys? their sort of potentially

John Floren

methanol there's I'm well. with like Yes. your of Germany of in of not a is of tons XXXs discussions there. the as of some their couple complex assessment And But of make aware refineries that. dynamics any would that I on X,XXXs part agree

$XX So And it of customers how energy paying customers our Europe a in survived MMBtu our gas. even question environment customers in in does that how mark. big or continue for current the does is

And derivatives made a to where chain, about supply but there go be Europe. nice may not years, up global move get quickly predict. demand thing a we supplier in over shifts coming very being some So the hard of to global the ends with certainly integrated can where the if being it's

to that a may our supplier we're So good be up. customers, end sure well to wherever we to make again, demand positioned very I think continue that

Hassan Ahmed

Thank much. John. so helpful, Very you

John Floren

Thank you.

Operator

is Neivert Sandler. The Piper ahead. Charles question you. Thank Please from next go from

Charles Neivert

Good guys. morning,

in -- areas you you Just or if That's you do one, $X earlier, or be site, that just unhedged to guess, you would sure prices to have adjust it's different on do conceivably production make the a you Like, gas already the quick something cheaper might you've where to but another if to done I this again. want would done gas answered high. it it in stuff way. purchase adjust US, can assuming we might production or thing, plan can

John Floren

North Outside in mechanism gas the Yes. we sharing contracts. America, our have

prices our through of and in positive environment, we're the are And gas cash EBITDA. per plus XXX So cycle ton set. this

next -- don't Inside price of us America a gas North North because year, outside I rates hedged America, see XX% high sharing plus on floor based we're So, mechanism. this with set contracts operating about that are our year. are requirements a XX% our adjusting

that's gas it's been make, mainly North if China, of X, buy a to in sense in year, what to yes, would reduce today gets but I'm to operating pricing where say about we'll to So directionally if do, plan we've America, take to and what doing it rates more we And what we economical do. this product situation Geismar do buy then makes that. more versus not

Charles Neivert

Okay. continue And during off, start the I to that the quarter? more are Or I of or running, to there then the have have Should yet as numbers to might a at mean, operations capacity are follow-up, be able of is available? to course are more how much any looked that ramping? off starting gas? different Iranian the it conceivably start

John Floren

one time, No, rates, more that to came maybe on build we but infrastructure, was the would because invested And of to little get not understand able previous out some more they some I time. phenomenon nothing summer, it’s the forward. winter short-term, think until restrictions gas to the Charlie, imminent. for going under What saw they probably hard, are the plants as or opaque, is But those in year be seen we the to operate we the bit increase available next uranium out methanol. of production. quarter more gas in has this little believe construction, in they it to in time. bit their a continue pretty quite operating today there's been on investments we what's money the going pattern And make gas that's and around until see same upstream a occurring The years, make we going

Charles Neivert

much. very Thanks Okay.

John Floren

you. Thank

Operator

Thank Instructions] is you. Please Credit from [indiscernible] ahead. [Operator go question The John next Suisse. from

John Roberts

It’s John John. Roberts, but hi,

John Floren

Hi, John.

John Roberts

discussion methanol ships is on diesel ammonia, and as methanol methanol know to fuel ships the maybe will between impressive. ships ship also have ships well? or Do try progress But the well. and with flexibility you on both? dual -- as ammonia, planned ammonia about the choose or methanol operators those there's the Or if progress or industry The as being ammonia are not

John Floren

fuel I'm ships. being with any Yes. aware discussed ammonia vessels I'm fuel methanol and dual ammonia. not aware of as for of, a

it any a ammonia to colder. bit has or are more And to looking behind is bit quite that engines handle, different the I'm releases for I think be leaks of That's around producing than are, anybody. storage we manufacturers methanol it's hard a will challenges lot the ammonia a ammonia. to with handling not more, run aware and at mention, where engine not on good they're

safety So that I it perspective, certainly has methanol I from has think a advantages. think

think have I've demand. when So a go have much XXX% we up the very technology, industry reasons, space. going LNG, didn't nothing to some the day, going know And noises around it's a obvious I And back happen methanol think be And never handling impact and this said of proving the take to for were LNG. ammonia, is methanol, now that the whole up penetration and in will yes, again, to we significant I to to price. need so doesn't a of all on big

of viable engines in ammonia be would and product the I forward, world. all So some a terminals get the issues And to get that availability ships provided handling going and may to resolved. ammonia of bunkering the can the built be then expect ammonia they

So it'll all think time. some doable, I take but

John Roberts

are? methanol high chemical the the use occurs being some are of value in highest always prices then the And if down, highest applications, not fuel rationing methanol capacity there's or and actually the almost or back use what fuel onto with given of in of that methanol oil prices question how values

John Floren

world that's lot a Well, the how on that around happens the margin capacity. pricing a that's MTO. feedstock a today NAFTA And And as is ethane and all that's of or feedstock, one on much costs a crackers of what that the factor the olefins that's markets. lot always for the really and really aren't depending in methanol using

And view go on up we to change that's to MTO unless that not prices is certainly going a that that olefin are, it's So, and watch I the you the from view. have they are where margin. one XX% expect our that's don't

John Roberts

Great. Thank you.

John Floren

Thanks, John.

Operator

time. registered Thank to the you, Mr. meeting there this are questions I over like turn to would no at further back Floren.

John Floren

you our questions your in Thank for interest Okay. and company.

to close the and quarter also and new an asset that to value hope fuel increasing chemical you October burning update has that is look consumer hundreds a we emphasize Before lot cleaner on essential we Thank of we There's our organization capital used startup is to products. the shareholder and I building blocks, we with industrial us meaningful to us allocation X of want that our which fourth call, in the growing prior a further and in capacity produce a Geismar This portfolio. positioned in plant marine Excitement XXXX. Methanol you is significant enhance a cash across believe demand prices, asset outlook deliver which a when portfolio across for on generates growing fuel. range will quarter our well flow We of will execute allows ethanol additions the priorities. results. methanol you. as third industry minimal the join are forward demand has positive

Operator

this ended. and thank lines participation. conference time, your now Thank you. has disconnect The we at for you your Please

Methanex (MEOH) 28 Jul 222022 Q2 Earnings call transcript