RBC cuts Methanex target on Titan plant idling, gas deal failure
Methanex will indefinitely idle its Trinidad plant after failing to secure natural gas supplies, prompting RBC Capital to lower its price target on the oversold methanol producer.
Methanex Corp. is preparing to halt operations at its Titan methanol plant in Trinidad and Tobago after failing to negotiate a new natural gas supply agreement. The company announced the indefinite shutdown on June 30, just ahead of the current gas contract's expiration in the third quarter.
While the facility will be maintained for a potential future restart if supply conditions improve, the loss of production capacity removes a key asset from the global methanol market. Methanex supplies the broader chemical and petrochemical industries, while also leasing terminal facilities and managing its own storage and shipping network.
The operational disruption prompted RBC Capital analyst Nelson Ng to adjust his valuation model for the NASDAQ-listed stock. On July 1, Ng lowered his price target from $70 to $65 while maintaining a Sector Perform rating.
Ng based the downward revision on shifting global energy and shipping dynamics. He noted that easing tensions between the U.S. and Iran should facilitate a gradual revival of commercial shipping through the Strait of Hormuz. This normalization of trade routes is expected to push methanol prices down from a second-quarter peak toward more stable levels in the second half of the year.
Despite the reduced price target and the imminent idling of a major production facility, Methanex currently trades at a notable discount to analyst expectations. A target price of $65 implies an adjusted upside of more than 43% from its present market valuation. This significant gap has placed the stock among a group of heavily oversold names on the NASDAQ.
For institutional investors and executives tracking the chemicals sector, the situation highlights the tightrope between regional feedstock availability and international pricing pressures. Methanex's performance in the coming quarters will depend heavily on its ability to secure favorable natural gas terms in Trinidad and how quickly global methanol prices adjust to a reopening Strait of Hormuz.
