Ladies and gentlemen, thank you for standing by. Welcome to the Methanex Corporation Q4 2017 Earnings Call. I would now like to turn the conference over to Mr. Dean Richardson, Vice President, Treasury and Investor Relations. Please go ahead, Mr. Richardson.

Thank you. Good morning, ladies and gentlemen. Welcome to our fourth quarter 2017 results conference call. Our 2017 fourth quarter news release, management's discussion and analysis and financial statements can be accessed from the Reports tab of the Investor Relations page on our website at www.methanex.com. I would like to remind our listeners that our comments and answers to your questions today may contain forward-looking information. This information, by its nature, is subject to risks and uncertainties that may cause the stated outcome to differ materially from the actual outcome. Certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections, which are included in the forward-looking information. Please refer to our fourth quarter 2017 MD&A and to our 2016 annual report for more information. I would also like to caution our listeners that any projections provided today regarding Methanex's future financial performance are effective as of today's date. It is our policy not to comment on or update this guidance between quarters. For clarification, any references to revenue, EBITDA, cash flow or income made in today's remarks reflect our 63.1% economic interest in the Atlas facility and our 50% economic interest in the Egypt facility. In addition, we report our adjusted EBITDA and adjusted net income to exclude the mark-to-market impact on share-based compensation and the impact of certain items associated with specific identified events. We report these non-GAAP measures in this way to make them a better measure of underlying operating performance, and we encourage analysts covering the company to report their estimates in this matter. I would now like to turn the call over to Methanex's President and CEO, Mr. John Floren, for his comments and a question-and-answer period.

Thanks, Dean. Good morning, everybody. 2017 ended up on a very positive note. Our fourth quarter financial results illustrate the strong earnings power and cash generation ability of our business. Methanol prices increased throughout the quarter and this combined with another record quarter of production volume and sales drove fourth quarter adjusted EBITDA to $254 million. For the full year of 2017, we achieved EBITDA of $838 million, a record that was achieved with an average realized methanol price of $337 per tonne. Adjusted net income for the fourth quarter was $143 million, or $1.70 per share. After increasing sharply in late 2017, methanol prices have remained firm in early 2018 in all three major regions. January contract prices in North America and Asia Pacific were $479 per tonne and $470 per tonne and increased from December prices by $67 and $40 respectively. Our first quarter 2018 posted price for Europe is EUR380 per tonne, up 15% compared to the fourth quarter. We recently announced increases to our February contract prices for North America to $506 per tonne and in Asia to $480 per tonne. We believe that the strength in methanol pricing late in 2017 and into 2018 can be attributed to a number of factors. Methanol demand in 2017 from both traditional and energy sectors was solid. Olefin prices in the fourth quarter supported high affordability for methanol-to-olefin, MTO production and demand from that sector was strong. More recently, a number of MTO facilities have undertaken planned or unplanned downtime for maintenance and technical issues. We continue to observe high operating rates at MTO facilities that are not experiencing technical issues. We expect three other MTO plants currently under construction to be completed in 2018 with a combined capacity consume over 3 million tonnes of methanol annually at…

[Operator Instructions] And our first question is from Daniel Jester from Citi.

So I think John you mentioned this in your prepared remarks about the production issues in China, the natural gas issues and then the environmental shutdowns. Can you just kind of parse the effect that both of those have had. And as you look into the second quarter and the third quarter, is there any way to size how much you expect this capacity to come back online? Thanks.

Yeah. It wasn't only the natural gas was diverted, but the price is much higher than it was in the fourth quarter as well, which has led to a much higher cost curve in Q1 than we would have seen last year, late last year. We would expect as things normalize there that some gas -- natural gas methanol plants will start up again. It's really hard for us to estimate exactly how much, but we would expect some additional capacity to be operating a natural gas as we get into the late second quarter. As far as the environmental, I mean it's been pretty clear in the five year plan in China for some time that especially on the East Coast, they're looking to clean up the air and part of that is getting rid of industries that consume coal. So we would expect that trend to continue. To what extent is really hard again to guess. As I mentioned before, there's over 200 plants in China and we monitor them all, but how they're all going to behave at any given time is really hard to guess, but fundamentally, we do expect the environmental restrictions and improvements to continue and probably a little bit more supply from natural gas based methanol late into Q2.

And then three or four months ago, the Chinese government set some targets for ethanol usage and I was wondering since that's been out there for a bit, if you've had some time to think about what the implications that could be for methanol in the gasoline pool in China the next couple of years?

We don't see any impact on the use of methanol on the gasoline pool as a result of the announcement. We're reading the same stuff you do. Ethanol will be part of the gas bill in China, but what we're seeing in China is a move to more high blend methanol like 85 and 100% and that’s what we think and we've always said the future of methanol is in the fuel bill, the early stages is low level blends, which we've seen in China and now we're seeing a lot of work at the high level blends and yearly producing 100% methanol engines for cars. So we continue to be very optimistic even at current prices that methanol is a very affordable clean burning fuel. So, it not only meets the goal of reducing imported oil dependency, but also the cleaning up the air and I think the cleaning up the air in the environment is going to be more important the future than it has been in the past. So I think methanol will continue to be used and we'll see more and more movement to high level blends over the months and years.

The next question is from Joel Jackson from BMO Capital Markets.

I could be wrong about this. I think in the past, you've talked about maybe a 25% to 30% tax rate range. Looking at US tax reform, looking at this year, considering a G1, G2 maybe have a disproportionate share of earnings versus capacity, your production, what is sort of the tax free numbers guidance rate we should be going with for this year.

Ian Cameron, our CFO will answer that for you, Joel.

Yeah. So Joel, we have guidance for that 20% to 30% tax rate depending on methanol price. As John mentioned in his remarks, we would expect that the future tax rate globally to be about 25% at today's methanol prices and slightly lower at lower methanol prices. So we do benefit from the lower statutory rate, but there are certain deductions that were available to us pretax reform that have less value for us today going forward. So overall, guidance not that dissimilar to what we've guided in previous periods.

And also, I mean I think you talked in your release about seeing 4% methanol demand globally in 2017, so tiny bit lower than kind of 5% range I think you've been discussing over the mid-term. Can you maybe share John, what in 2017 -- what parts of demand mix was better than expected, what was weaker than expected?

Well, I think we had those MTO technical issues, as we came out of February of last year and lasted for most of the -- rest of the first quarter and the second quarter. I think that was the big difference. These are very large plants consuming very large quantities of methanol. And when they're down, it has a big impact on the supply demand balance and the overall growth in demand. So that really to us was really the only pickup versus what we were forecasting.

Nothing stronger than you’re expecting?

Well, the cold boilers, cold boilers in China would have been a surprise on the upside. Everything else pretty well within what we were expecting.

The next question is from Cherilyn Radbourne from TD Securities.

Clearly, I thought strong production was a highlight of the quarter and just understanding that there are turnarounds and seasonal fluctuations in gas availability, can you just talk about whether you’re going to be holding the team to that kind of a standard in 2018?

Well, I think we can produce more. So I'm going to hold on to a higher standard. If you look at our reliability rate, it's still -- we've still got room there. So I think we achieved around 93 and where our goal is 97. So we think there's another 200,000 to 300,000 tonnes on a normal run rate that we can get and that's our goal and that's what we're going to be looking at. As far as gas availability, Egypt's great, Trinidad has been basically where we've been guiding and Chile is better. So as long as we run these plants well and we've invested a lot of capital in these plants and we’ve invested a lot in people, in training, we expect to get a little bit more and I think there's opportunities for us to debottleneck certain plants like in the United States and we can get another 10% to 15% as we do that. So I don't think we're at the end of our growth in production volumes. I would expect us to continue to look to set records on the quarterly production. Having said that, we will have turnarounds and I’ve guided to 2 to 3 per year depending on the schedule and in those quarters, we'll probably have a little less than market production, but overall, I think our production is showing to be quite strong and based on the investments we've made over the last years and we're not done yet.

And separately I realize it's early days on this, but can you talk about what you're seeing and hearing in terms of the Chinese decision to ban the import of recycled plastics, just in terms of enforcement and what implications that may have for Chinese ores and demand?

It's still early days like you mentioned, but if the ban does take full effect, it's the equivalent of 4 world scale crackers. So very significant amount of olefins coming out of the global chain. They've also, I think, recently banned imports of newsprint as well I think. So I think they're looking to not be the recipient of the world's recycled products because I think their resources like water, et cetera are really limited. So I think directionally this is going to continue and I think it's really good for the MTO producers in China and I think it's good for the olefins industry.

The next question is from Jacob Bout from CIBC.

I’m looking for a little more color on the gas situation in Chile. So just remind us again, in Argentina, supply coming from there, how seasonal is that and what type of volumes should we be thinking about?

Yeah. It's a contracted volume that we have the ability to vary the offtake. So you should think of it as a chunk of gas. It will be seasonal. I wouldn't expect the tolling gas we're getting today to be available in their winter time or summer time, but we have the ability to take it at a rate that allows us to run the plan at 100% and that's what we'll do with the gas. We’ll fill in whatever storage we have from Chile and fill it in with Argentina gas on the tolling arrangement, toll hours to run the plant at full rates, which really gives us a lot better efficiency on the gas that we are using from Chile, so that will improve our economics and obviously helps our fixed costs as well. So I think it's a real positive and I've said before, I think longer-term, especially in their summer time, we are expecting to get gas from Argentina, from other gas suppliers that we used to deal with. Now that the border is open and the meters are flowing, I think it's a really positive thing and I think there's a lot more gas being found in the Neuquen Basin in Argentina and as that becomes more and more successful, we would expect the gas in the South that's still there to become available for export. We haven't secured anything beyond the tolling arrangement now. We're working hard to do so, but I think it's really trending positively for getting more gas in the future from Argentina.

And then as we think about the rampup of Chile IV, what would be the conventional versus the non-conventional gas split there?

Well, it's all non-conventional in Chile. The gas from YPF, I'm not sure which pool is probably conventional. The gas they've had in the ground for some time, but the unconventional gas in Argentina is really a bit more in the north, so probably what will happen is, as that gets developed, it will back out of the Southern Gas, which is conventional. So, it depends on what time of the year, because I’ll remind you that the town of Punta Arenas in their winter doubles their consumption of natural gas. So I think Chile Gas will continue to represent the vast majority of the gas that we're going to run in Chile and I think that the Argentinian gas that we're hoping to contract will allow us to underpin the refurbishment of Chile 1 as well as additional Chile gas. So lots of moving parts, it continues to be moving in the right direction and for a modest capital investment, we think we can get some additional capacity as we come through the end of the decade.

Maybe just one more quick one, just on MTO capacity utilization in China, how do you think about that? Have we hit a floor here, even though prices may go higher?

I think what's been written by the industry experts is a little bit misleading. They include in their operating rates MTP or methanol to propylene which has to run for four years. So I don't know how you can include that in an operating rate. They also include plants that are down for planned or unplanned maintenance. So if you exclude those with -- plants that can run and have been running at really high rates, 85% to 95% operating rates, we didn't see any change as we saw 450 methanol spot pricing in China. So I think this whole affordability equation is really misunderstood by the industry experts as well and we've been saying that consistently for the last year, we've had a real nice run here for two months to test the affordability and it's going to be a lot more inelastic than people have thought. And so we're not seeing any change in the operating behavior of the MTO participants based on $400 methanol today. So it's been there for quite some time now, so we would think if they were losing tons of cash, they would shut down. So, we'll continue to monitor as I’ve said before, this is all new space for us and what we're seeing is pretty well what we thought would happen and it's nice to see our model being reinforced by behaviors but we’ll continue to monitor it.

And as far as those three new plants coming online, do you expect any sensitivity there?

We don’t. We think the MTO that -- once it starts up and it's integrated will run. I think there will be teething issues like we've seen with some of the other MTO plants or any major chemical plant as it starts up. We would expect technical issues to arise, especially as these plants are fairly complicated and integrated, but once they get these issues lined out, we would expect them to run on high rates and in fact some of the guys that are running today are planning to do turnarounds this year to debottleneck and add significant capacity over and above what they have today which will lead to a lot more methanol demand that have not been talked about by any industry expert I've seen. So I think the MTO space is really misunderstood and it obviously is a key driver for methanol supply demand balance and pricing.

Thank you. The next question is from Hassan Ahmed from Alembic Global.

John, a question on the supply side of things. Obviously, you mentioned earlier, as it relates to the whole sort of environmental curtailment side of things that there are 200 plants in China and sort of tough to keep track of each and every one of those, but associated with that, could we or could you sort of say for sure if there is X amount of capacity that's never going to come back online on the Chinese side and part and parcel with this question on the supply side again, are the facilities still off line and what are you guys hearing about sort of gross allocation there. Will they come back online? Will they run at reduced operating wages? I mean, any thoughts around that would be great.

Yeah. So as far as SABIC, I think they've had some issues in the fourth quarter. We understand there are some continued on issues. We’ve been told or have read that they’re technical in nature. We have no inside information that it’s gas related but they've had ongoing issues of supply -- available supply out of their plants and that has not been resolved as of today based on our understanding. As far as China, I mean it's a guess -- we can't predict the behaviors of what people will do, but what I would say is that China is not -- you need to have approval to do things and directionally there, they want to clean up the environment. So even if I wanted to start up my coal plant, I would need permission and those permissions may or may not be granted depending on a number of factors that are really hard to predict. But directionally especially on the cost, we would expect less coal consumption for methanol or ammonia heating, et cetera as they look to clean up the air and how does that get related quarter by quarter, it’s really, really tough to predict, but I'll remind you too Hassan that the coal price has gone up significantly. We're over RMB700 for coal now. So that has had a huge impact on the cost curve as well. So if you think prices are going to fall dramatically here in the next nine months, I think you have to look at that cost curve with $700, RMB700 coal and 300 gas where it is. There's a lot of production that's well above $250 a tonne that would have to turn off. So in order to get to that kind of level, you would have to see demand destruction like we saw in 2008. So we're not predicting that but certainly there are people out there predicting that. So we’ll see what happens.

Now on the demand side of things, towards the end of last year, a couple of news items coming out of India talking about how India may consider as much as 15% methanol blend. So what are you hearing about that, be it in terms of timing, how serious these guys are and what that could actually mean in terms of global demand?

Yeah. I think they're very serious. We've read a lot of stuff about it and they're moving forward quite quickly. I think their long term plan is to produce the methanol from coal in India to service that demand. So probably if there was any demand drivers, it would be shorter term and not a lot. I think they will gradually ramp it up, but their coal is not high quality and it's in the mountains. So it's hard to access as well. So I think that's a -- I've said this before, it's a natural market for Middle Eastern and Arabian Gulf producers to service and the more that they take there, the less it will be shipped elsewhere. So I think it's again a positive directional move by India, but I don't have any real predictions on how much and when and how it's going to be serviced. Like I've said all along, this is a global commodity, supply all of the equal demand and just a matter of what price and the more demand, you would think the more affordability for the -- higher affordable applications. So I think it's a positive development.

Makes sense. And one final one if I may, over the last couple of months, obviously it seemed that inventory levels, particularly in China were quite lean. Where do you see inventory levels right now, particularly in China?

Very lean, around the world, very lean. We’ve had a huge drawdown, we had I think some consumers and people in the industry thinking production from new plants was going to come on late last year, which hasn't and is further delayed which has led to a real shortage of products, especially in China, but not -- also in the Atlantic basin. If you look at the spot prices in the Atlantic basin, they've moved up quite rapidly and well above $400 a ton. And there are a lot of industry experts out there predicting that the price of the Atlantic would collapse. So here we are with real data showing that that hasn't happened and the pricing continues to be quite strong and demand continues to be quite strong. So, we'll continue to watch what happens as new production eventually makes its way into the market, but at the same time, if you have a normal growth this year, the three new MTO plants, you're still going to grow by 2 million to 3 million tonnes. So I don't know where all that methanol is going to come from, but we’ll certainly watch it closely.

The next question is from Jonas Oxgaard from Bernstein.

I have some follow ups on the early question on Chinese methanol. My understanding is that there is – the bigger this year is levels, China is already effectively maxed out and so any ethanol consumption has to be at the expense of methanol and BTE. So how do we see the Chinese increase in ethanol without seeing a similar decrease in methanol demand?

It's not our understanding. We don't view it that way. They continue to increase MTBE production in the country and we would expect them to continue to use more and more methanol, especially high level blends. So we would have a difference of opinion on that point.

And is that different since they will produce engines that run on high oxygenates or is it oxygenate limit doesn’t apply to methanol?

As I mentioned earlier, people like Geely are producing 100% engines and cars that run on 100% methanol. I've mentioned earlier that the B85 that you see in North America can run on very high level blends of methanol as well. So the technology is there, it's being implemented and we would expect the trend in China on methanol consumption for automobiles and trucks to be at the high level blends.

Okay. Is there any kind of plain figures for these 100% methanol vehicles?

Figures as far as production?

Yeah.

Yeah, they're producing about 100,000 of these per year and they plan from what I understand Geely has announced doubling of that capacity.

Okay, thank you.

Thank you.

Thank you. [Operator Instructions] And the next question is Nelson Ng from RBC Capital Markets. Please go ahead.

Great. Thanks. John, you mentioned that you expect three MTO facility to come online this year. I was just wondering whether that includes or excludes the energy facility in Inner Mongolia, because I wasn't sure whether that one was officially pushed out to 2019 or not?

Yeah, that's one of them that includes that one.

And could you comment about whether it's been pushed out to 2019 or is that or has yet to be determined?

No, I don't know where you are reading that. But our current information from our team in China is it'll be second half of 2018.

Okay, great.

That maybe pushed out a little bit from their national -- maybe it was first half ’18, that may be the confusion but our information is still the second half of ‘18 for that one.

Okay, got it. And then just a clarification for Egypt. So presumably you will be trying to make cash distributions as early as allowable. But in terms of the 12-month test period on plant capacity, would any of the 2017 quarters be used in that test period or does it start from, I guess, like January 2018 in terms of months to be used in that test period?

I will let Ian Cameron, our CFO answer that question.

Yeah, Nelson, it would include that 2017 is a trailing 12 month period but excludes periods where you're under turnaround.

Okay, got it. So there was a turnaround in Q3, I believe, right?

That’s right. Yeah, effectively as long as we're running at more than 70% for the next 60 days we'll be able to do distributions and that's our intention is to distribute to our partners and to ourselves the available cash.

Okay, great. Thanks a lot.

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

Yeah, good morning guys. Just a quick one on Trinidad, just looking at the production data over the last three years, the guidance really hasn't changed that much but you have seen a notable step up in production here in ’17 at least and I think the export data from the country would support that as well. What’s changed there? Is it just the new field that have come online in the upstream D.C. that is continuing at current rates, getting better, just give us a bit of a sense for where we should expect the cadence to go going forward?

Yeah, our guidance has been consistent, again it's a complicated market. We've had seen some new guys come on, we've seen some depletions and we've seen some of our competitors be less fortunate as far as their contracting strategies and having to shut down capacity and you would have seen an announcement from an ammonia producer last week shutting down capacity. So as those capacities get shut down at points there's more gas available for other users. But how do you predict that in the future? All we can do is give you the guidance that we think is fair for what we expect to happen. If we over-achieve that guidance, that’s quite, I mean we will take that all the way to the bank but I think we're comfortable in the guidance. And if we have other information that we can produce at a higher rates then we will change that guidance, but right now we're really comfortable with that 85% on average, but if we are going to exceed it, penalize us Steve.

And just one follow up on the MTO side. You've given us good description here about how you've been pleasantly surprised by MTWO operating it. I'm still a little bit surprised they've held in so strong given the move you’ve had in methanol. Olefin has certainly moved as well, but they've lagged relative to methanol. What is it that we don't understand about the economics of the MTO producer level or the supposed experts don't understand it? Do you have a sense for that? Is the contractual downstream obligations or is it just a misunderstanding of the actual economics of the facility? I'm just trying to sense for that so we can better gauge what the true economics might be.

Well, part of it is misunderstanding, many different parts. You mentioned we've been pleasantly surprised, we're not surprised. I think our models have proven out what we thought. I mean it’s nice to be reaffirmed when you're the lone wolf in the wilderness talking a different story than everybody else, so that's always nice to have that confirmation that, but we're not really off our rocker and the analysis we do is quite solid. And I'd say the big change from what people were thinking as the Olefin prices themselves have been much higher. If you look at Q4 Olefin price, you look at oil, it's almost at $70 now. That has an impact on ethylene and propylene and naphtha et cetera, but the integration is well. We've always said that the plants that are integrated, you can't just take the price of propylene and ethylene and three times the price of methanol and run an affordability model. That's not how it works. Now that's definitely how it works for the methanol to propylene plants that are running, but they have been running for four years since we saw the collapse of oil in mid-2014. So I think there's a number of misunderstood factors and people reporting things that people are shutting down for economic reasons when they're technical. So I don't know why people do that, but we will just have to live with our data. We live with what we know we're talking to these – our customers of ours, we're talking to them on a on a daily if not weekly basis and they are understanding the industry is different than some of the industry experts. And I think it's led to a lot of confusion and until we see more data of how they run at different price points, there will probably continue to be confusion. So we will do our best to clarify and to put our position out there. But at the end of the day people will make their own decisions based on what they think and what they believe.

Okay, very hopeful. Thank you.

Thank you. The next question is from John Roberts from UBS. Please go ahead.

Thank you. A nice quarter.

Thanks John.

You normally guide for minimal profits on the methanol that you buy and resell, but in a rapidly rising environment like pricing like we had in the quarter, do you actually make material profitability on the distribution because the price is moving up after you've bought it?

Yeah, we make material profitability on the products we produce. If you look at our EBITDA, generation at $400 a ton is about $150 a ton. That's where we make our money. We've guided on our purchase product which includes commission, the long term off take and spot that over the cycle we will break-even or make a few million dollars. You're right to point out when prices are rising we'll make a few more, but when price is low we might lose a few. But it's immaterial. I mean it's not in the tens of millions of dollars. So it's a rounding error really. When you produce a quarter like we did this quarter and the quarter ahead of us, that's just a rounding error. If production behaves we will more than make up for that increase in the purchased product sales. So it's all about production and methanol price, equity production.

Thank you. And then I think you normally talk about $1,000 a ton in terms of reinvestment costs from ethanol. The IGP methanol project made an announcement during the quarter with a much lower capital cost number. Is that apples and oranges? Is there something not comparable about the Haldor Topsoe process that they're doing with what you normally talked about in terms of reinvestment economics?

Yeah, pretty preliminary stuff. We haven't seen much data. What I would say, the data that's out there in the public for two other projects that we monitor they are at $1,200 a ton today, so and climbing maybe, because nothing's been completed. So I think there's a lot of announcements with a lot of numbers. They never haven’t -- at least that product hasn't said what’s in that number. And there -- is it just EPC, what is it, so until we get more data it is a bit of a guess for us, but all of the hard data that we have today with the plant that's under construction and others that are looking to move forward like Yuhong are in that $1,200 range. So if they can do it for that price I may buy one from them, so we will see.

Okay, thank you.

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

Hi, there. Two questions. One, can you flush out a little bit your thinking around the US or North America capacity addition that you think the industry will do over the next say, three, five years, because as you say there are some very large projects being floated but parsing which ones are likely? And secondly when you -- can you just remind us as your capacity as your new plants ramp up when we -- which quarters we should see the working capital build?

Okay. So far as new production and it is an OCI plant that's under construction that we would expect to be completed in the next three to five years, probably sooner. And that will add about 1.7 million tons. There's a Yuhong plant that I just mentioned that we expect to be towards the end of the decade, into 2020, probably at the earliest. Beyond that there's nothing under construction. There's a lot of things announced, a lot of things talked about, but I'll remind you that the later construction availability and productivity for building anything in the United States especially in the south is really tight. As well, our current estimate is that when you start with FID to when you turn on the top it’s about 40 months, so what are we know, February 1, 2018, unlikely we're going to see anything beyond those two plants that I just mentioned in the United States in the timeframe you're talking about. And if there is something more it will be at the end of that five year window that you're talking about. Can you just clarify for me the question you asked about our working capital as -- are you saying our inventory is going to go up as we add the Chile production? I wasn't really sure Laurence what you are getting at?

Exactly. Since you have a bit of a working capital build, as the plant ramps up, is it just how does the how does that flow through and -- or does it just get or does it turnover so quickly it won't be noticeable?

Yeah, I think we're getting more and more efficient all the time. It may -- there may be quarters where we have a bit more of inventory and with little less inventory but if we're carrying a million tons and we're selling 11 million that's pretty good turnover and considering that about a third is on the water and a third is at the plants, so it's not staying in the tanks very long.

Okay, thank you.

The next question is from Matthew Blair from Tudor, Pickering, Holt. Please go ahead.

Hey, good morning John.

Good morning.

You always seem to have good insights on methanol start up timing due to your shipping capacities and capabilities. Are you expecting any new Iranian methanol supply in the first half of 2018?

No.

Got it. And then any updated thinking on potential longer term US methanol expansion for Methanex? It seems like you can make a pretty good case here just given the commodity environment in the US with natural gas staying below $3 even though oil is above $70 or around $70. You also have a more stable tax environment and then your financial position is pretty strong here. So could you just kind of lay out how you think about potential US expansion?

Yes. We're really fortunate to have some really low cost options in front of us to expand capacity like Chile. And I mentioned earlier we have some bottlenecking capability or opportunities in Geismar for both plants, so we're going to be focused on those. But we still have -- internal teams working on a second plant in Medicine Hat and a third plant in Geismar. We think they are privilege projects. We haven't done the feed work et cetera, but based on our initial basic work we think they're pretty privileged projects and we look to execute those when the timing is right. And we have these other projects that are adding capacity to our company for a fraction of the new build even if it is a privilege project, but we're continuing to work on those and you should expect us to add capacity by next new brownfield or greenfield addition to be in North America. That's where we will be focused and the timing on that is really subject to market conditions and as we complete our other lower cost opportunities, but I said in my remarks don't expect us to be spending any significant capital on new build for the next 18 months. But we'll continue to work on these projects and be ready to execute them when we think the timing is right. And that's when -- as we complete our other opportunities to grow our company for a fraction of brownfield cost. But these plants I think you have to look at the many new brownfield builds that are over million tons are going to have to – all that products have to find its way to China and that's how we would do the economics. So we do agree with you that the gas market here is quite attractive and the conditions in the United States are quite attractive especially with the new tax rate. And considering we have a workforce and a site and terminal and all that stuff in Geismar and we can buy oxygen across the fence and utilities, yeah, it's pretty attractive. We can use the off gas from our existing G1 and G2 which would allow us to lower capital on a brownfield site. So we think we have projects there that’s better than anything that’s currently under construction or being considered. But we will focus on the brownfield -- the bottlenecking and the Chile opportunities and stay tuned.

Thank you.

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

Good morning, guys. A few quickies I guess. If you look at the discount off of the list price for the year, it was about 15% but then more recently it's 13%. Is it something that we might see just down even a little bit more in a rising price scenario? I mean it typically goes up when things are going -- when the prices are coming down? Could we see this either stabilize around 13% or maybe even get a little bit lower from here?

Thanks for bringing that up because I've been pretty consistent in guiding to 15%, so I'm glad that's where it ended up. So I look good again for a change. But guidance is the same. When pricing is going up, you should expect the discount to be a little lower than 15% and when prices are going down you should expect it to be a little higher but on average 15% is a good number and I am glad that’s what it was in the ’17, so good news.

Yeah. When we look globally, is there any difference between regions in that discount, is it little bit -- again without hitting a number but is it a little bit bigger in one place than any others or is it pretty much similar across the board?

Yeah, you know the only differential I would say is in Latin America and Western Canada. Those are pretty regional markets where we get a little bit better, but the rather markets are fairly as product moves around the world pretty easily, so discounts are fairly similar. I mean there may be slightly differences but it's immaterial.

Okay, lastly the number -- well two things, I'm sorry. One the number in New Zealand was clearly higher than it’s been. It started to -- was there any high CO2 gas involved in there or we still running on the normal gas that you guys have typically gotten?

Yeah, we have some CO2 gas, but that did not change in the quarter. We're still actively pursuing higher CO2 gas and think that's one thing I've been talking about for a long time now, we haven't achieved it. So we will continue to work on it but I said before with the Todd and Shell group separating I think there's more opportunity for us in the future to get the high CO2 gas, but wouldn’t be putting it in your models at this time.

Right. And that would increase output if it were to come?

Yeah, if we got all high CO2 gas we needed, we would go from 2.2 million to 2.4 million.

Okay and were there any turnarounds in 4Q or was it pretty much we're running flat out? I mean where you could run you had -- you did.

Yes, we didn’t have any turnarounds. I think we got to squeeze out some more production, but I'm not unhappy with the record as well. So I'll continue to be more happy as we can crease our regular production from current facilities. There's degrees of happiness Charles.

Good. Well, always leaves room. Good to have some room going up anyway on that front. All right, well, thanks very much. Appreciate it.

Thank you.

Thank you. And the last question is from Chris Shaw from Monness, Crespi. Please go ahead.

Hey, guys, how are you doing?

Good, Chris.

I am curious – I start to hear pricing basis, I'm just wondering if we are sort of following a pattern from last year, reaching sort of high levels early February, March and then some plants, some CO plants were down for technical reasons, due to Chinese New Year and pricing weakened from there. I mean is that going to be – do you think there could be a similar pattern to this year or is demand stronger or are these plants that have gone down, the MTO plant, as big as the ones that went down last first quarter.

I never predict the future but what I would say is the conditions today are quite different than this time last year and we have more demand, less supply. And the MTO guys have been running for a year longer, they're lined out more. So, again we're in a high price environment that none of the experts were predicting. I think the predictions were less than $300 a ton and we are north of $400 a ton, so I don't like to be in the prediction business because you're always wrong and you're wrong by a lot most of the time. So I think we like the supply demand conditions that we see today which should lead to a really good price environment. The next milestone for us that we're watching is any new production that might come on. And there'll be some around the edges and extra like I said natural gas possibly in China and maybe temporary demand slowdown because of Chinese New Year, but that’s happened every year. And inventories are really low. So it’s going to -- even if production came back to a perfection, it will take some time for inventories to build back up. So again the future is hard to predict. We like what we see right now and we will continue to monitor as new production comes on, where it flows and what that does to the overall supply/demand balance. But a big change this time this year versus this time last year, the oil price is close to $70 which is impacting affordability. Coal is over $700 MB which has really impacted the middle to three quarter part of the cost curve and natural gas is really high in China which has led the cost curve to move up quite nicely. So even if we see some moderation, I think we demonstrated at $337 a ton we recorded a record year. And that was with production that we think we can improve on. So we will do well at any price of methanol over the cycle and obviously at current pricing we're going to do extremely well and we will continue to return that excess cash that we don't have to grow the company or our regular dividend to shareholders through repurchases. And we've been very consistent about that and that's what we'll continue to do.

You don’t see any pricing developing, any seasonality then?

Seasonality. Well, I think the past doesn't predict the future. You could look and see in the last few years as we get into the fourth quarter pricing has gone up and there's not one reason for that. So I think to say that in the future it would be a stretch, but we've never really witnessed a lot of seasonality in our business and we don't expect that to change, so we'll continue to look at I think like I said the next new marker as new production that may come on sometime this year and we'll watch how that impacts the supply/demand balance.

Okay, thanks a lot.

Thanks, Chris.

Well, if there's no more questions I will close. So I'm very pleased with our 2017 performance generating adjusted EBITDA of $883 million, the highest in the company's history driven by record sales and production volumes. These results reflect the improved earnings power of the company and our ability to generate significant cash flows across a broad range of methanol prices. Our priorities for capital allocation are to meet our financial commitments, meet the near term growth objectives in Chile and return excess cash to shareholders. Thank you for the interest in our company and have a great day.

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