Methanex Shares Surge 14% as Middle East Supply Crunch Lifts Methanol Prices and Delivers Record Cash Flow

Shares of Methanex jumped 14% on Friday after the world's largest methanol producer reported record cash flow and third-quarter results that topped expectations, as supply disruptions in the Middle East pushed methanol prices sharply higher.

Methanex stock rose $8.81, or 14.04%, to close at $71.57 on the Nasdaq. In Toronto, the shares climbed about 13.9% to 100 Canadian dollars.

Volume reached about 2.8 million shares, nearly four times the three-month average of about 716,000. The company's market value rose to about $5.5 billion.

The gain stood out on a day when the S&P 500 fell 1.82%.

Strong quarter

Methanex reported adjusted earnings of $3.69 per share for the third quarter, well above analysts' estimates of $2.86. Revenue rose 50% from a year earlier to $1.39 billion, beating forecasts of about $1.30 billion.

Adjusted earnings before interest, taxes, depreciation and amortization totaled $543 million.

The company said it generated record cash flow during the quarter, with free cash flow of about $731 million.

Prices drive the gains

Higher prices, rather than higher production, drove the results. Methanex's methanol production fell 3% to 2.1 million metric tons.

But the company's average realized price jumped nearly 48% to $510 per metric ton.

Management said the conflict in the Middle East has severely curtailed production in a region that normally supplies 30% to 35% of the internationally traded methanol market. The supply disruption has tightened global markets and lifted prices.

Methanol is used to make plastics, paints and other chemicals, and is increasingly used as a fuel, including in some ships.

Paying down debt, buying back shares

Methanex said it is using its strong cash flow to reduce debt. The company plans to redeem $700 million in senior notes by the end of 2026.

It also announced a new share buyback program. The board authorized the repurchase of up to 3.87 million shares, about 5% of the shares available for trading, between Nov. 4, 2026, and Nov. 3, 2027.

Outlook

Methanex said it expects even higher realized prices and EBITDA in the fourth quarter.

The company's 2026 production guidance calls for 9 million tons of methanol and 300,000 tons of ammonia.

Analysts upbeat

Analysts responded positively. CIBC Capital Markets raised its price target to $77 and kept an outperform rating, citing higher earnings expectations for 2026 and 2027.

Canadian brokerages National Bank Financial and CIBC upgraded the Toronto-listed shares, while Zacks Research upgraded the stock to strong buy in October.

Near 52-week high

Friday's rally pushed Methanex close to its 52-week high of $72.32, far above its low of $34.01. The stock has risen about 82% this year and about 92% over the past 52 weeks.

The shares trade at about 15.4 times trailing earnings.

Risks

Methanex's results depend heavily on methanol prices, which are volatile and tied to global supply and demand. If the Middle East conflict eases and production recovers, prices could fall, reducing the company's profits.

Analysts on the earnings call asked whether high prices were causing customers to delay long-term decisions, such as orders for methanol-fueled ships. Management said it had not seen significant delays.

For now, Methanex is benefiting from a rare period of tight supply, and investors are rewarding its decision to use the windfall to strengthen its balance sheet and return cash to shareholders.