Methanex Turns Higher Methanol Prices Into $520 Million of Free Cash Flow

Methanex converted a stronger methanol market into $520 million of adjusted free cash flow in the third quarter, giving the company room to reduce debt and return capital while preparing to idle capacity in New Zealand.

Net income attributable to shareholders was $265 million, or $3.42 a diluted share. Adjusted net income was $284 million, or $3.69 a share, and adjusted EBITDA reached $543 million. Revenue was $1.39 billion on production of 2.14 million tonnes.

The company's average realized methanol price was $510 a tonne, down from $529 in the second quarter. That sequential decline does not describe conditions at quarter-end. Methanex said it expected October and November prices to average about $525 to $550 a tonne, reflecting tighter supply.

The distinction between price and volume matters. Methanex benefited from a strong market, but earnings also depended on running plants and selling available product. High benchmark prices cannot produce cash if outages or logistics constraints prevent delivery.

Operating cash flow reached $646 million. After capital spending and other adjustments, Methanex reported $520 million of adjusted free cash flow. That is the company's stated adjusted measure; it should not be confused with operating cash flow or a different definition of free cash flow.

The balance sheet is already absorbing some cash. Methanex ended the quarter with $912 million and said it would redeem $300 million of its $700 million notes due in 2027. It plans to address the remaining $400 million in the fourth quarter. The board also authorized a bid covering as many as 3,868,213 shares, about 5% of the public float.

Capital returns are not the only call on cash. Methanex plans to idle its New Zealand operations in the first quarter of 2027 and expects about $10 million of restructuring costs. Idling can remove production from a tight market, but it also reduces the company's capacity. Investors should distinguish possible support for industry pricing from the direct loss of site output.

The quarter delivered both a payoff and a warning. Strong methanol economics produced substantial cash, and management is using it to reduce near-term debt while opening a path to buybacks. Yet the business remains exposed to commodity prices, plant availability and regional gas supply.

The next indicators are realized price per tonne, production, progress on the remaining 2027 notes and the New Zealand plan. If prices stay firm and plants run reliably, Methanex can keep repairing its capital structure. If either condition weakens, the quarter's exceptional cash generation will be hard to repeat.