Methanex (MX) was down 5% yesterday on market optimism around a conclusion in Iran, but is still up over 50% YTD - given its position as the world’s largest supplier of methanol…
… which faces serious disruption from the conflict (not just oil and fertilizer).
Iran puts into the market around 9-10M tonnes a year. And then when you combine other countries that are going to be impacted it’s probably another 9-10M tonnes of a 100M tonne market, but really an internationally traded market of 55M tonnes.
With >30% of the traded supply offline, the company’s pricing is adjusting higher - which should translate to more cash flow…
… given its shipping costs are largely fixed (time charter vs. spot rate). Anything incremental should go towards leverage reduction…
… which makes the story cleaner, given the cyclical nature of the business.
