MEOH Methanex Corporation

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NEWS RELEASE	Methanex Corporation 1800 - 200 Burrard St. Vancouver, BC Canada V6C 3M1 Investor Relations: (604) 661-2600 www.methanex.com

METHANEX CORPORATION 2017 SECOND QUARTER NEWS RELEASE    PAGE 1

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FINANCIAL AND OPERATIONAL DATA

	Three Months Ended							Six Months Ended
($ millions except per share amounts and where noted)	Jun 30 2017		Mar 31 2017		Jun 30 2016			Jun 30 2017		Jun 30 2016
Production (thousands of tonnes) (attributable to Methanex shareholders)	1,614		1,866		1,770			3,480		3,409
Sales volume (thousands of tonnes)
Methanex-produced methanol	1,790		1,756		1,689			3,546		3,218
Purchased methanol	387		512		533			899		955
Commission sales	297		304		140			601		308
Total sales volume 1	2,474		2,572		2,362			5,046		4,481
Methanex average non-discounted posted price ($ per tonne) 2	398		437		260			418		266
Average realized price ($ per tonne) 3	327		365		223			347		227
Revenue	669		810		468			1,480		903
Adjusted revenue	716		832		496			1,548		946
Adjusted EBITDA	174		267		38			441		74
Cash flows from operating activities	250		221		34			470		104
Adjusted net income (loss)	74		140		(31	)		214		(55	)
Net income (loss) (attributable to Methanex shareholders)	84		132		(3	)		216		(26	)
Adjusted net income (loss) per common share	0.85		1.56		(0.34	)		2.40		(0.62	)
Basic net income (loss) per common share	0.96		1.47		(0.03	)		2.43		(0.29	)
Diluted net income (loss) per common share	0.89		1.46		(0.08	)		2.39		(0.34	)
Common share information (millions of shares)
Weighted average number of common shares	88		90		90			89		90
Diluted weighted average number of common shares	88		90		90			89		90
Number of common shares outstanding, end of period	87		89		90			87		90

1

Methanex-produced methanol represents our equity share of volume produced at our facilities and excludes volume marketed on a commission basis related to the 36.9% of the Atlas facility and 50% of the Egypt facility that we do not own. Methanex-produced methanol includes any volume produced by Chile using natural gas supplied from Argentina under a tolling arrangement ("Tolling Volume"). There has been no Tolling Volume produced since the fourth quarter of 2015.

2	Methanex average non-discounted posted price represents the average of our non-discounted posted prices in North America, Europe and Asia Pacific weighted by sales volume. Current and historical pricing information is available at www.methanex.com .

3	Average realized price is calculated as revenue, excluding commissions earned and the Egypt non-controlling interest share of revenue, but including an amount representing our share of Atlas revenue, divided by the total sales volume of Methanex-produced and purchased methanol, but excluding Tolling Volume.

METHANEX CORPORATION 2017 SECOND QUARTER NEWS RELEASE    PAGE 2

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A reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted net income (loss) and the calculation of Adjusted net income (loss) per common share is as follows:

	Three Months Ended										Six Months Ended
($ millions except number of shares and per share amounts)	Jun 30 2017			Mar 31 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Net income (loss) (attributable to Methanex shareholders)	$	84		$	132		$	(3	)		$	216		$	(26	)
Mark-to-market impact of share-based compensation, net of tax	(10		)	8			(7		)		(2		)	(8		)
Argentina gas settlement, net of tax	—			—			(21		)		—			(21		)
Adjusted net income (loss)	$	74		$	140		$	(31	)		$	214		$	(55	)
Diluted weighted average shares outstanding (millions)	88			90			90				89			90
Adjusted net income (loss) per common share	$	0.85		$	1.56		$	(0.34	)		$	2.40		$	(0.62	)

▪

We recorded net income attributable to Methanex shareholders of $ 84 million during the second quarter of 2017 compared to net income of $ 132 million in the first quarter of 2017 . The decrease in earnings is primarily due to a decrease in our average realized methanol price during the second quarter. Our average realized price decreased to $327 per tonne for the second quarter of 2017 from $365 per tonne for the first quarter of 2017 .

▪	We recorded Adjusted EBITDA of $174 million for the second quarter of 2017 compared with $267 million for the first quarter of 2017 . Adjusted net income was $74 million for the second quarter of 2017 compared to Adjusted net income of $140 million for the first quarter of 2017 .

▪	Total sales volume for the second quarter of 2017 was 2,474,000 tonnes compared with 2,572,000 tonnes for the first quarter of 2017. Sales of Methanex-produced methanol were 1,790,000 tonnes in the second quarter of 2017 compared with 1,756,000 tonnes in the first quarter of 2017 .

▪	Cash flows from operating activities in the second quarter of 2017 were $250 million compared with $221 million for the first quarter of 2017 , an increase of $29 million . Cash flows from operating activities in the quarter increased despite a decrease in Adjusted EBITDA primarily as a result of a reduction in non-cash working capital.

▪	Our planned capital expenditures directed towards maintenance, turnarounds and catalyst changes for operations, including our 63.1% share of Atlas and 50% of Egypt, is currently estimated to be approximately $40 million to the end of 2017.

▪

We announced today that the Board of Directors approved an amendment to the normal course issuer bid which increases the number of common shares that may be purchased from 4,492,141 to 6,152,358 common shares, representing 10% of the public float at the time of the announcement of the bid and the maximum number of common shares that may be purchased under this bid. To date we have repurchased 3,755,000 common shares under the current bid for approximately $168 million.

▪	During the second quarter of 2017 we paid a $0.30 per common share dividend to shareholders for a total of $26 million .

METHANEX CORPORATION 2017 SECOND QUARTER NEWS RELEASE    PAGE 3

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PRODUCTION HIGHLIGHTS

	Q2 2017				Q1 2017		Q2 2016			YTD Q2 2017		YTD Q2 2016
(thousands of tonnes)	Operating Capacity 1		Production		Production		Production			Production		Production
New Zealand 2	608		350		533		577			883		1,086
Geismar (USA)	500		437		493		527			930		1,010
Trinidad (Methanex interest) 3	500		449		396		417			845		730
Egypt (50% interest)	158		159		159		53			318		128
Medicine Hat (Canada)	150		159		118		123			277		282
Chile 4	220		60		167		73			227		173
	2,136		1,614		1,866		1,770			3,480		3,409

1

Operating capacity includes only those facilities which are currently capable of operating, but excludes any portion of an asset that is underutilized due to a lack of natural gas feedstock over a prolonged period of time. Our current annual operating capacity is 8.5 million tonnes, including 0.9 million tonnes related to our Chile operations. The operating capacity of our production facilities may be higher than original nameplate capacity as, over time, these figures have been adjusted to reflect ongoing operating efficiencies at these facilities. Actual production for a facility in any given year may be higher or lower than operating capacity due to a number of factors, including natural gas composition or the age of the facility's catalyst.

2	The operating capacity of New Zealand is made up of the two Motunui facilities and the Waitara Valley facility .

3	The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities .

4	The production capacity of our Chile I and IV facilities is 1.7 million tonnes annually assuming access to natural gas feedstock.

▪	New Zealand production was 350,000 tonnes, impacted mainly as a result of a planned turnaround at the Motunui 1 facility.

▪	Geismar production was 437,000 tonnes, impacted by planned maintenance activities.

▪	Trinidad production was 449,000 tonnes. We continue to experience gas curtailments in Trinidad with gas availability in the second quarter of 2017 at improved levels compared to the first quarter of 2017.

▪	Egypt production was 159,000 tonnes (Methanex share). The plant continued to run at high rates in the quarter.

▪	Medicine Hat production was 159,000 tonnes. The plant was shut down for repairs for part of the first quarter of 2017 and since restart has operated at high rates.

▪	Chile production was 60,000 tonnes, produced using only natural gas supply from Chile. Production was impacted by lower gas deliveries during the southern hemisphere winter months and a mechanical issue.

METHANEX CORPORATION 2017 SECOND QUARTER NEWS RELEASE    PAGE 4

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CONFERENCE CALL

Sandra Daycock

Director, Investor Relations

Methanex Corporation

604-661-2600

METHANEX CORPORATION 2017 SECOND QUARTER NEWS RELEASE    PAGE 5

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2		Share Information Methanex Corporation’s common shares are listed for trading on the Toronto Stock Exchange under the symbol MX and on the Nasdaq Global Market under the symbol MEOH. Transfer Agents & Registrars CST Trust Company 320 Bay Street Toronto, Ontario Canada M5H 4A6 Toll free in North America: 1-800-387-0825	Investor Information All financial reports, news releases and corporate information can be accessed on our website at www.methanex.com . Contact Information Methanex Investor Relations 1800 - 200 Burrard Street Vancouver, BC Canada V6C 3M1 E-mail: invest@methanex.com Methanex Toll-Free: 1-800-661-8851
	Management's Discussion and Analysis for the Three and Six Months Ended June 30, 2017
At July 26, 2017 the Company had 86,124,058 common shares issued and outstanding and stock options exercisable for 2,002,622 additional common shares.

SECOND QUARTER MANAGEMENT’S DISCUSSION AND ANALYSIS ("MD&A")

Except where otherwise noted, all currency amounts are stated in United States dollars.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

▪	A reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted net income (loss) and the calculation of Adjusted net income (loss) per common share is as follows:

	Three Months Ended										Six Months Ended
($ millions except number of shares and per share amounts)	Jun 30 2017			Mar 31 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Net income (loss) (attributable to Methanex shareholders)	$	84		$	132		$	(3	)		$	216		$	(26	)
Mark-to-market impact of share-based compensation, net of tax	(10		)	8			(7		)		(2		)	(8		)
Argentina gas settlement, net of tax	—			—			(21		)		—			(21		)
Adjusted net income (loss)  1	$	74		$	140		$	(31	)		$	214		$	(55	)
Diluted weighted average shares outstanding (millions)	88			90			90				89			90
Adjusted net income (loss) per common share  1	$	0.85		$	1.56		$	(0.34	)		$	2.40		$	(0.62	)

1

The Company has used the terms Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share, Adjusted revenue, and operating income throughout this document. These items are non-GAAP measures that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to Additional Information - Supplemental Non-GAAP Measures on page 12 of the MD&A for reconciliations to the most comparable GAAP measures.

▪

We recorded net income attributable to Methanex shareholders of $ 84 million during the second quarter of 2017 compared to net income of $ 132 million in the first quarter of 2017 . The decrease in earnings is primarily due to a decrease in our average realized methanol price during the second quarter. Our average realized price decreased to $327 per tonne for the second quarter of 2017 from $365 per tonne for the first quarter of 2017 .

▪	We recorded Adjusted EBITDA of $174 million for the second quarter of 2017 compared with $267 million for the first quarter of 2017 . Adjusted net income was $74 million for the second quarter of 2017 compared to Adjusted net income of $140 million for the first quarter of 2017 .

▪	Production for the second quarter of 2017 was 1,614,000 tonnes compared with 1,866,000 tonnes for the first quarter of 2017 . Refer to the Production Summary section on page 3 of the MD&A.

▪	Total sales volume for the second quarter of 2017 was 2,474,000 tonnes compared with 2,572,000 tonnes for the first quarter of 2017. Sales of Methanex-produced methanol were 1,790,000 tonnes in the second quarter of 2017 compared with 1,756,000 tonnes in the first quarter of 2017 .

▪

We announced today that the Board of Directors approved an amendment to the normal course issuer bid which increases the number of common shares that may be purchased from 4,492,141 to 6,152,358 common shares, representing 10% of the public float at the time of the announcement of the bid and the maximum number of common shares that may be purchased under this bid. To date we have repurchased 3,755,000 common shares under the current bid for approximately $168 million.

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▪	During the second quarter of 2017 we paid a $0.30 per common share dividend to shareholders for a total of $26 million .

FINANCIAL AND OPERATIONAL DATA

	Three Months Ended							Six Months Ended
($ millions except per share amounts and where noted)	Jun 30 2017		Mar 31 2017		Jun 30 2016			Jun 30 2017		Jun 30 2016
Production (thousands of tonnes) (attributable to Methanex shareholders)	1,614		1,866		1,770			3,480		3,409
Sales volume (thousands of tonnes)
Methanex-produced methanol	1,790		1,756		1,689			3,546		3,218
Purchased methanol	387		512		533			899		955
Commission sales	297		304		140			601		308
Total sales volume 1	2,474		2,572		2,362			5,046		4,481
Methanex average non-discounted posted price ($ per tonne) 2	398		437		260			418		266
Average realized price ($ per tonne) 3	327		365		223			347		227
Revenue	669		810		468			1,480		903
Adjusted revenue	716		832		496			1,548		946
Adjusted EBITDA	174		267		38			441		74
Cash flows from operating activities	250		221		34			470		104
Adjusted net income (loss)	74		140		(31	)		214		(55	)
Net income (loss) (attributable to Methanex shareholders)	84		132		(3	)		216		(26	)
Adjusted net income (loss) per common share	0.85		1.56		(0.34	)		2.40		(0.62	)
Basic net income (loss) per common share	0.96		1.47		(0.03	)		2.43		(0.29	)
Diluted net income (loss) per common share	0.89		1.46		(0.08	)		2.39		(0.34	)
Common share information (millions of shares)
Weighted average number of common shares	88		90		90			89		90
Diluted weighted average number of common shares	88		90		90			89		90
Number of common shares outstanding, end of period	87		89		90			87		90

1

Methanex-produced methanol represents our equity share of volume produced at our facilities and excludes volume marketed on a commission basis related to the 36.9% of the Atlas facility and 50% of the Egypt facility that we do not own. Methanex-produced methanol includes any volume produced by Chile using natural gas supplied from Argentina under a tolling arrangement ("Tolling Volume"). There has been no Tolling Volume produced since the fourth quarter of 2015.

2	Methanex average non-discounted posted price represents the average of our non-discounted posted prices in North America, Europe and Asia Pacific weighted by sales volume. Current and historical pricing information is available at www.methanex.com .

3	Average realized price is calculated as revenue, excluding commissions earned and the Egypt non-controlling interest share of revenue, but including an amount representing our share of Atlas revenue, divided by the total sales volume of Methanex-produced and purchased methanol, but excluding Tolling Volume.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 2

MANAGEMENT’S DISCUSSION AND ANALYSIS

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PRODUCTION SUMMARY

	Q2 2017				Q1 2017		Q2 2016			YTD Q2 2017		YTD Q2 2016
(thousands of tonnes)	Operating Capacity 1		Production		Production		Production			Production		Production
New Zealand 2	608		350		533		577			883		1,086
Geismar (USA)	500		437		493		527			930		1,010
Trinidad (Methanex interest) 3	500		449		396		417			845		730
Egypt (50% interest)	158		159		159		53			318		128
Medicine Hat (Canada)	150		159		118		123			277		282
Chile 4	220		60		167		73			227		173
	2,136		1,614		1,866		1,770			3,480		3,409

1

Operating capacity includes only those facilities which are currently capable of operating, but excludes any portion of an asset that is underutilized due to a lack of natural gas feedstock over a prolonged period of time. Our current annual operating capacity is 8.5 million tonnes, including 0.9 million tonnes related to our Chile operations. The operating capacity of our production facilities may be higher than original nameplate capacity as, over time, these figures have been adjusted to reflect ongoing operating efficiencies at these facilities. Actual production for a facility in any given year may be higher or lower than operating capacity due to a number of factors, including natural gas composition or the age of the facility's catalyst.

2	The operating capacity of New Zealand is made up of the two Motunui facilities and the Waitara Valley facility (refer to the New Zealand section below).

3	The operating capacity of Trinidad is made up of the Titan (100% interest) and Atlas (63.1% interest) facilities (refer to the Trinidad section below).

4	The production capacity of our Chile I and IV facilities is 1.7 million tonnes annually assuming access to natural gas feedstock.

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METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 4

MANAGEMENT’S DISCUSSION AND ANALYSIS

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We review our financial results by analyzing changes in Adjusted EBITDA, mark-to-market impact of share-based compensation, depreciation and amortization, finance costs, finance income and other expenses, and income taxes. A summary of our consolidated statements of income (loss) is as follows:

	Three Months Ended										Six Months Ended
($ millions)	Jun 30 2017			Mar 31 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Consolidated statements of income (loss):
Revenue	$	669		$	810		$	468			$	1,480		$	903
Cost of sales and operating expenses	(502		)	(559		)	(430		)		(1,062		)	(834		)
Mark-to-market impact of share-based compensation	(12		)	10			(8		)		(2		)	(9		)
Adjusted EBITDA (attributable to associate)	41			34			13				75			21
Amounts excluded from Adjusted EBITDA attributable to non-controlling interests	(22		)	(28		)	(5		)		(50		)	(7		)
Adjusted EBITDA (attributable to Methanex shareholders)	174			267			38				441			74
Mark-to-market impact of share-based compensation	12			(10		)	8				2			9
Depreciation and amortization	(61		)	(56		)	(58		)		(117		)	(111		)
Argentina gas settlement	—			—			33				—			33
Finance costs	(24		)	(23		)	(22		)		(47		)	(43		)
Finance income and other expenses	6			—			—				6			3
Income tax recovery (expense)	(9		)	(38		)	—				(47		)	10
Earnings of associate adjustment 1	(19		)	(17		)	(11		)		(36		)	(19		)
Non-controlling interests adjustment 1	5			9			9				14			18
Net income (loss) (attributable to Methanex shareholders)	$	84		$	132		$	(3	)		$	216		$	(26	)
Net income (loss)	$	101		$	151		$	(7	)		$	252		$	(38	)

1	These adjustments represent depreciation and amortization, finance costs, finance income and other expenses, and income taxes associated with our 63.1% interest in the Atlas methanol facility and the non-controlling interests.

($ millions)	Q2 2017 compared with Q1 2017			Q2 2017 compared with Q2 2016			YTD Q2 2017 compared with YTD Q2 2016
Average realized price	$	(81	)	$	231		$	540
Sales volume	(12		)	(2		)	11
Total cash costs	—			(93		)	(184		)
Increase (decrease) in Adjusted EBITDA	$	(93	)	$	136		$	367

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 5

MANAGEMENT’S DISCUSSION AND ANALYSIS

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Average realized price

	Three Months Ended							Six Months Ended
($ per tonne)	Jun 30 2017		Mar 31 2017		Jun 30 2016			Jun 30 2017		Jun 30 2016
Methanex average non-discounted posted price	398		437		260			418		266
Methanex average realized price	327		365		223			347		227

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($ millions)	Q2 2017 compared with Q1 2017			Q2 2017 compared with Q2 2016			YTD Q2 2017 compared with YTD Q2 2016
Methanex-produced methanol costs	$	(14	)	$	(43	)	$	(70	)
Proportion of Methanex-produced methanol sales	17			5			6
Purchased methanol costs	(8		)	(61		)	(122		)
Other, net	5			6			2
Increase in total cash costs	$	—		$	(93	)	$	(184	)

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	Three Months Ended										Six Months Ended
($ millions except share share price)	Jun 30 2017			Mar 31 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Methanex Corporation share price   1	$	44.05		$	46.90		$	29.10			$	44.05		$	29.10
Grant-date fair value expense included in Adjusted EBITDA and Adjusted net income (loss)	4			3			4				7			8
Mark-to-market impact due to change in share price	(12		)	10			(8		)		(2		)	(9		)
Total share-based compensation expense (recovery), before tax	$	(8	)	$	13		$	(4	)		$	5		$	(1	)

1	US dollar share price of Methanex Corporation as quoted on the NASDAQ Global Market on the last trading day of the respective period.

Finance Costs

	Three Months Ended										Six Months Ended
($ millions)	Jun 30 2017			Mar 31 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Finance costs	$	24		$	23		$	22			$	47		$	43

Finance costs are primarily comprised of interest on the unsecured notes, limited recourse debt facilities and finance lease obligations. Finance costs for the second quarter of 2017 are comparable to those for the first quarter of 2017. The increase in finance costs for the three and six month periods ended June 30, 2017 compared to the same periods in 2016 is primarily due to interest incurred relating to ocean going vessels treated as finance leases.

Finance Income and Other Expenses

	Three Months Ended										Six Months Ended
($ millions)	Jun 30 2017			Mar 31 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Finance income and other expenses	$	6		$	—		$	—			$	6		$	3

The change in finance income and other expenses for all periods presented is primarily due to the impact of changes in foreign exchange rates.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 8

MANAGEMENT’S DISCUSSION AND ANALYSIS

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Income Taxes

A summary of our income taxes for the second quarter of 2017 compared to the first quarter of 2017 is as follows:

	Three months ended June 30, 2017							Three months ended March 31, 2017
($ millions except where noted)	Net Income			Adjusted Net Income				Net Income			Adjusted Net Income
Amount before income tax	$	110		$	93			$	189		$	188
Income tax expense	(9		)	(19		)		(38		)	(48		)
	$	101		$	74			$	151		$	140
Effective tax rate	8		%	20		%		20		%	26		%

We earn the majority of our earnings in New Zealand, Trinidad, the United States, Egypt, Canada and Chile. In Trinidad and Chile, the statutory tax rate is 35%. The statutory rates in Canada and New Zealand are 26.5% and 28%, respectively. The United States statutory tax rate is 36% and the Egypt statutory tax rate is 22.5%. As the Atlas entity is accounted for using the equity method, any income taxes related to Atlas are included in earnings of associate and therefore excluded from total income taxes but included in the calculation of Adjusted net income.

The effective tax rate based on Adjusted net income was 20% for the second quarter of 2017 compared to 26% first quarter of 2017 . Adjusted earnings represents the amount that is attributable to Methanex shareholders and excludes the mark-to-market impact of share-based compensation and the impact of certain items associated with specific identified events. The effective tax rate differs from period to period depending on the source of earnings and the impact of foreign exchange fluctuations against the United States dollar on our tax balances. In periods with low income levels, the distribution of income and loss between jurisdictions can result in income tax rates that are not indicative of the longer term corporate tax rate.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 9

MANAGEMENT’S DISCUSSION AND ANALYSIS

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SUPPLY/DEMAND FUNDAMENTALS

Demand

Methanol demand in the second quarter of 2017 was relatively flat versus the first quarter of 2017, and was approximately 5% higher compared to the second quarter of 2016. Demand from the MTO sector declined as a number of MTO facilities underwent planned maintenance or experienced technical issues during the quarter. There are three additional MTO units currently under construction with the combined capacity to consume over three million tonnes of methanol annually at full operating rates, and we expect these plants to be completed in 2018. The future operating rates of MTO producers will depend on a number of factors, including pricing for their various final products, the degree of downstream integration of these units with other products, and the impact of the olefin industry feedstock costs, including naphtha, on relative competitiveness. Traditional chemical demand (which accounts for approximately 55% of global methanol demand) continues to be healthy. We believe that growth in demand from traditional chemical applications is generally correlated to GDP and industrial production growth rates.

Supply

Overall industry supply was relatively flat in the second quarter of 2017 relative to the first quarter of 2017. Maintenance activities at a number of North American and European production facilities kept markets relatively tight in the Atlantic, while production improved in Asia and the Middle East as winter gas constraints eased and unplanned outages were resolved. Supply in China was constrained by a number of methanol plant turnarounds early in the second quarter, but improved as plants returned to production later in the quarter. With respect to capacity additions, OCI N.V. and Consolidated Energy Limited (through its subsidiary G2X Energy) continue to progress their jointly owned Natgasoline project, a 1.8 million tonne plant under construction in Beaumont, Texas. There are a number of other projects under discussion in the United States. Other than one project, Yuhuang Chemical, who have announced that they have secured partial financing for a 1.8 million tonne plant in St. James Parish, Louisiana, we believe that there has been limited committed capital to date. In Iran, there are a number of plants at various stages of construction. We expect just over four million tonnes of capacity to come onstream in Iran over the next two years; however, the start-up timing and future operating rates at these facilities will be dependent on various factors. To the end of 2018, we expect approximately four to five million tonnes of new capacity additions in China. Beyond 2018, we anticipate that new capacity additions in China will be modest due to an increasing degree of restrictions placed by the Chinese government on new coal-based capacity additions. We expect that production from new methanol capacity in China will be consumed domestically.

Methanol Price

Our average realized price decreased by $38 per tonne to $327 per tonne from $365 per tonne in the first quarter. With overall supply relatively flat, the main driver of the lower methanol pricing was softening demand from the MTO sector stemming from technical issues described above.

Methanex's posted prices moved lower in the second quarter of 2017 and stabilized early in the third quarter of 2017. Contract prices in North America and Asia declined from their March levels of $499 per tonne and $500 per tonne, respectively, to $376 and $320 per tonne for July and August, 2017. In Europe, the second quarter posted price was €450 per tonne, and declined to €320 per tonne for the third quarter of 2017, in keeping with pricing in North America and Asia. The methanol price will ultimately depend on the strength of the global economy, industry operating rates, global energy prices, new supply additions and the strength of global demand.

 

Methanex Non-Discounted Regional Posted Prices 1
(US$ per tonne)	Aug 2017		Jul 2017		Jun 2017		May 2017		Apr 2017
North America	376		376		386		409		442
Europe 2	365		365		480		480		480
Asia Pacific	320		320		320		360		390

1	Discounts from our posted prices are offered to customers based on

various factors.

2	€320 for Q3 2017 (Q2 2017 – €450) converted to United States dollars.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 10

MANAGEMENT’S DISCUSSION AND ANALYSIS

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LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities in the second quarter of 2017 were $250 million compared with $221 million for the first quarter of 2017 and $34 million for the second quarter of 2016 . Cash flows from operating activities for the six month period ended June 30, 2017 were $470 million compared with $104 million for the same period in 2016. The changes in cash flows from operating activities resulted from changes in the following:

($ millions)	Q2 2017 compared with Q1 2017			Q2 2017 compared with Q2 2016			YTD Q2 2017 compared with YTD Q2 2016
Change in Adjusted EBITDA (attributable to Methanex shareholders)	$	(93	)	$	136		$	367
Deduct change in Adjusted EBITDA of associate	(7		)	(28		)	(54		)
Dividends received from associate	(5		)	17			13
Cash flows attributable to non-controlling interests	(6		)	17			43
Non-cash working capital	130			97			28
Income taxes paid	(2		)	(5		)	(10		)
Argentina gas settlement	—			(33		)	(33		)
Share-based payments	6			3			8
Other	6			12			4
Increase in cash flows from operating activities	$	29		$	216		$	366

During the second quarter of 2017 we paid a quarterly dividend of $0.30 per common share for a total of $26 million and we repurchased 2.6 million common shares for $115 million.

We announced today that the Board of Directors approved an amendment to the normal course issuer bid which increases the number of common shares that may be purchased from 4,492,141 to 6,152,358 common shares, representing 10% of the public float at the time of the announcement of the bid and the maximum number of common shares that may be purchased under this bid. To date we have repurchased 3,755,000 common shares under the current bid for approximately $168 million.

We operate in a highly competitive commodity industry and believe it is appropriate to maintain a strong balance sheet and financial flexibility. At June 30, 2017 , our cash balance was $361 million , including cash related to our Egypt entity consolidated on a 100% basis. We invest our cash only in highly rated instruments that have maturities of three months or less to ensure preservation of capital and appropriate liquidity.

Certain conditions have not been met related to the Egypt limited recourse debt facilities, resulting in a restriction on shareholder distributions from the Egypt entity. At June 30, 2017, the cash balance held in our Egypt entity on a 100% ownership basis was $109 million . The Egypt entity continues to be able to fully utilize its funds for operating, capital and financing needs, including the repayment of the Egypt limited recourse debt facilities. Refer to note 5 of the Company’s unaudited condensed consolidated interim financial statements for further details.

We have a committed revolving credit facility with a syndicate of highly rated financial institutions that expires in December 2019. Refer to note 5 of the Company's unaudited condensed consolidated interim financial statements for further discussion of the terms of the credit facility. We do not have any debt maturities until 2019 other than normal course obligations for principal repayment related to our Egypt and other limited recourse debt facilities.

Over the past 6 months we have been analyzing refurbishing Chile 1 versus restarting our Chile IV plant. We have concluded that restarting the Chile IV plant is our best option. The Board of Directors recently approved $55 million for the restart of our idle Chile IV plant. However, prior to initiating major capital spending we need to contract additional natural gas beyond our current commitments through mid-2018. We are optimistic we can contract additional gas at economic prices over the coming months. We will continue to spend a few million dollars to enable the restart of Chile IV targeted for the third quarter of 2018. Our planned capital expenditures directed towards maintenance, turnarounds and catalyst changes for operations, including our 63.1% share of Atlas and 50% of Egypt, is currently estimated to be approximately $40 million to the end of 2017.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 11

MANAGEMENT’S DISCUSSION AND ANALYSIS

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We believe we are well positioned to meet our financial commitments, pursue our near-term growth opportunities in Chile and deliver on our commitment to return excess cash to shareholders through dividends and share repurchases .

CONTROLS AND PROCEDURES

During the second quarter of 2017 , no changes were made in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ADDITIONAL INFORMATION – SUPPLEMENTAL NON-GAAP MEASURES

In addition to providing measures prepared in accordance with International Financial Reporting Standards ("IFRS"), we present certain supplemental non-GAAP measures throughout this document. These are Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share, Adjusted revenue, and operating income (loss). These measures do not have any standardized meaning prescribed by generally accepted accounting principles ("GAAP") and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental non-GAAP measures are provided to assist readers in determining our ability to generate cash from operations and improve the comparability of our results from one period to another. We believe these measures are useful in assessing operating performance and liquidity of the Company’s ongoing business on an overall basis. We also believe Adjusted EBITDA is frequently used by securities analysts and investors when comparing our results with those of other companies.

Adjusted EBITDA (attributable to Methanex shareholders)

Adjusted EBITDA differs from the most comparable GAAP measure, net income (loss) attributable to Methanex shareholders, because it excludes the mark-to-market impact of share-based compensation, depreciation and amortization, finance costs, finance income and other expenses, and income taxes. Adjusted EBITDA includes an amount representing our 63.1% share of the Atlas facility and excludes the non-controlling shareholders' interests in entities which we control but do not fully own.

Adjusted EBITDA and Adjusted net income (loss) exclude the mark-to-market impact of share-based compensation related to the impact of changes in our share price on SARs, TSARs, deferred share units, restricted share units and performance share units. The mark-to-market impact related to share-based compensation that is excluded from Adjusted EBITDA and Adjusted net income (loss) is calculated as the difference between the grant-date value and the fair value recorded at each period-end. As share-based awards will be settled in future periods, the ultimate value of the units is unknown at the date of grant and therefore the grant-date value recognized in Adjusted EBITDA and Adjusted net income may differ from the total settlement cost.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 12

MANAGEMENT’S DISCUSSION AND ANALYSIS

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The following table shows a reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted EBITDA:

	Three Months Ended										Six Months Ended
($ millions)	Jun 30 2017			Mar 31 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Net income (loss) (attributable to Methanex shareholders)	$	84		$	132		$	(3	)		$	216		$	(26	)
Mark-to-market impact of share-based compensation	(12		)	10			(8		)		(2		)	(9		)
Depreciation and amortization	61			56			58				117			111
Argentina gas settlement	—			—			(33		)		—			(33		)
Finance costs	24			23			22				47			43
Finance income and other expenses	(6		)	—			—				(6		)	(3		)
Income tax expense (recovery)	9			38			—				47			(10		)
Earnings of associate adjustment 1	19			17			11				36			19
Non-controlling interests adjustment 1	(5		)	(9		)	(9		)		(14		)	(18		)
Adjusted EBITDA (attributable to Methanex shareholders)	$	174		$	267		$	38			$	441		$	74

1	These adjustments represent depreciation and amortization, finance costs, finance income and other expenses, and income tax expense associated with our 63.1% interest in the Atlas methanol facility and the non-controlling interests.

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Common Share

Adjusted net income (loss) and Adjusted net income (loss) per common share are non-GAAP measures because they exclude the mark-to-market impact of share-based compensation and the impact of certain items associated with specific identified events. The following table shows a reconciliation of net income (loss) attributable to Methanex shareholders to Adjusted net income (loss) and the calculation of Adjusted net income (loss) per common share:

	Three Months Ended										Six Months Ended
($ millions except number of shares and per share amounts)	Jun 30 2017			Mar 31 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Net income (loss) (attributable to Methanex shareholders)	$	84		$	132		$	(3	)		$	216		$	(26	)
Mark-to-market impact of share-based compensation, net of tax	(10		)	8			(7		)		(2		)	(8		)
Argentina gas settlement, net of tax	—			—			(21		)		—			(21		)
Adjusted net income   (loss)	$	74		$	140		$	(31	)		$	214		$	(55	)
Diluted weighted average shares outstanding (millions)	88			90			90				89			90
Adjusted net income (loss) per common share	$	0.85		$	1.56		$	(0.34	)		$	2.40		$	(0.62	)

Adjusted Revenue (attributable to Methanex shareholders)

Adjusted revenue differs from the most comparable GAAP measure, revenue, because it excludes revenue relating to 50% of the Egypt methanol facility that we do not own and includes an amount representing our 63.1% share of Atlas revenue. It also includes commission earned on volume marketed on a commission basis related to both the 36.9% of the Atlas methanol facility and the 50% of the Egypt methanol facility that we do not own. A reconciliation from revenue to Adjusted revenue is as follows:

	Three Months Ended										Six Months Ended
($ millions)	Jun 30 2017			Mar 31 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Revenue	$	669		$	810		$	468			$	1,480		$	903
Methanex share of Atlas revenue 1	91			81			36				172			70
Non-controlling interests' share of revenue 1	(44		)	(58		)	(8		)		(102		)	(26		)
Other adjustments	—			(1		)	—				(2		)	(1		)
Adjusted revenue (attributable to Methanex shareholders)	$	716		$	832		$	496			$	1,548		$	946

1	Excludes intercompany transactions with the Company.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 13

MANAGEMENT’S DISCUSSION AND ANALYSIS

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Operating Income (Loss)

Operating income (loss) is reconciled directly to a GAAP measure in our consolidated statements of income.

QUARTERLY FINANCIAL DATA (UNAUDITED)

Our operations consist of a single operating segment - the production and sale of methanol. Quarterly results vary due to the average realized price of methanol, sales volume, and total cash costs. A summary of selected financial information is as follows:

	Three Months Ended
($ millions except per share amounts)	Jun 30 2017			Mar 31 2017			Dec 31 2016			Sep 30 2016
Revenue	$	669		$	810		$	585		$	510
Adjusted EBITDA	174			267			139			74
Net income (loss)	84			132			24			(11		)
Adjusted net income (loss)	74			140			41			(1		)
Basic net income (loss) per common share	0.96			1.47			0.28			(0.12		)
Diluted net income (loss) per common share	0.89			1.46			0.28			(0.12		)
Adjusted net income (loss) per common share	0.85			1.56			0.46			(0.01		)

	Three Months Ended
($ millions except per share amounts)	Jun 30 2016			Mar 31 2016			Dec 31 2015			Sep 30 2015
Revenue	$	468		$	435		$	484		$	527
Adjusted EBITDA	38			36			80			95
Net income (loss)	(3		)	(23		)	10			78
Adjusted net income (loss)	(31		)	(24		)	15			23
Basic net income (loss) per common share	(0.03		)	(0.26		)	0.10			0.87
Diluted net income (loss) per common share	(0.08		)	(0.26		)	0.10			0.54
Adjusted net income (loss) per common share	(0.34		)	(0.27		)	0.16			0.26

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 14

MANAGEMENT’S DISCUSSION AND ANALYSIS

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HOW WE ANALYZE OUR BUSINESS

Our operations consist of a single operating segment - the production and sale of methanol. We review our financial results by analyzing changes in the components of Adjusted EBITDA, mark-to-market impact of share-based compensation, depreciation and amortization, finance costs, finance income and other expenses, and income taxes.

The Company has used the terms Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share, Adjusted revenue and operating income throughout this document. These items are non-GAAP measures that do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Refer to Additional Information - Supplemental Non-GAAP Measures section on page 12 of the MD&A for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures.

In addition to the methanol that we produce at our facilities, we also purchase and re-sell methanol produced by others and we sell methanol on a commission basis. We analyze the results of all methanol sales together, excluding commission sales volume. The key drivers of changes in Adjusted EBITDA are average realized price, cash costs and sales volume, which are defined and calculated as follows:

PRICE	The change in Adjusted EBITDA as a result of changes in average realized price is calculated as the difference from period to period in the selling price of methanol multiplied by the current period total methanol sales volume, excluding commission sales volume and Tolling Volume, plus the difference from period to period in commission revenue.
CASH  COSTS	The change in Adjusted EBITDA as a result of changes in cash costs is calculated as the difference from period to period in cash costs per tonne multiplied by the current period total methanol sales volume, excluding commission sales volume and Tolling Volume in the current period. The cash costs per tonne is the weighted average of the cash cost per tonne of Methanex-produced methanol and the cash cost per tonne of purchased methanol. The cash cost per tonne of Methanex-produced methanol includes absorbed fixed cash costs per tonne and variable cash costs per tonne. The cash cost per tonne of purchased methanol consists principally of the cost of methanol itself. In addition, the change in Adjusted EBITDA as a result of changes in cash costs includes the changes from period to period in unabsorbed fixed production costs, consolidated selling, general and administrative expenses and fixed storage and handling costs.
SALES VOLUME	The change in Adjusted EBITDA as a result of changes in sales volume is calculated as the difference from period to period in total methanol sales volume, excluding commission sales volume and Tolling Volume, multiplied by the margin per tonne for the prior period. The margin per tonne for the prior period is the weighted average margin per tonne of Methanex-produced methanol and margin per tonne of purchased methanol. The margin per tonne for Methanex-produced methanol is calculated as the selling price per tonne of methanol less absorbed fixed cash costs per tonne and variable cash costs per tonne. The margin per tonne for purchased methanol is calculated as the selling price per tonne of methanol less the cost of purchased methanol per tonne.

We own 63.1% of the Atlas methanol facility and market the remaining 36.9% of its production through a commission offtake agreement. A contractual agreement between us and our partners establishes joint control over Atlas. As a result, we account for this investment using the equity method of accounting, which results in 63.1% of the net assets and net earnings of Atlas being presented separately in the consolidated statements of financial position and consolidated statements of income (loss), respectively. For purposes of analyzing our business, Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share and Adjusted revenue include an amount representing our 63.1% equity share in Atlas. Our analysis of depreciation and amortization, finance costs, finance income and other expenses, and income taxes is consistent with the presentation of our consolidated statements of income (loss) and excludes amounts related to Atlas.

We own 50% of the 1.26 million tonne per year Egypt methanol facility and market the remaining 50% of its production through a commission offtake agreement. We account for this investment using consolidation accounting, which results in 100% of the revenues and expenses being included in our financial statements. We also consolidate less than wholly-owned entities for which we have a controlling interest. Non-controlling interests are included in the Company’s consolidated financial statements and represent the non-controlling shareholders’ interests in the Egypt methanol facility and any entity where we have control. For purposes of analyzing our business, Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per common share and Adjusted revenue exclude the amounts associated with non-controlling interests.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 15

MANAGEMENT’S DISCUSSION AND ANALYSIS

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FORWARD-LOOKING INFORMATION WARNING

This Second Quarter 2017 Management’s Discussion and Analysis ("MD&A") as well as comments made during the Second Quarter 2017 investor conference call contain forward-looking statements with respect to us and our industry. These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. Statements that include the words "believes," "expects," "may," "will," "should," "potential," "estimates," "anticipates," "aim," "goal" or other comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements.

More particularly and without limitation, any statements regarding the following are forward-looking statements:

•	expected demand for methanol and its derivatives,

•	expected new methanol supply or restart of idled capacity and timing for start-up of the same,

•	expected shutdowns (either temporary or permanent) or restarts of existing methanol supply (including our own facilities), including, without limitation, the timing and length of planned maintenance outages,

•	expected methanol and energy prices,

•	expected levels of methanol purchases from traders or other third parties,

•	expected levels, timing and availability of economically priced natural gas supply to each of our plants,

•	capital committed by third parties towards future natural gas exploration and development in the vicinity of our plants,

•	our expected capital expenditures,

•	anticipated operating rates of our plants,

•	expected operating costs, including natural gas feedstock costs and logistics costs,

•	expected tax rates or resolutions to tax disputes,

•	expected cash flows, earnings capability and share price,

•	availability of committed credit facilities and other financing,

 

•

our ability to meet covenants or obtain or continue to obtain waivers associated with our long-term debt obligations, including, without limitation, the Egypt limited recourse debt facilities that have conditions associated with the payment of cash or other distributions and the finalization of certain land title registrations and related mortgages which require actions by Egyptian governmental entities,

•	expected impact on our results of operations in Egypt or our financial condition as a consequence of civil unrest or actions taken or inaction by Egyptian governmental entities,

•	our shareholder distribution strategy and anticipated distributions to shareholders,

•	commercial viability and timing of, or our ability to execute, future projects, plant restarts, capacity expansions, plant relocations or other business initiatives or opportunities,

•	our financial strength and ability to meet future financial commitments,

•	expected global or regional economic activity (including industrial production levels),

•	expected outcomes of litigation or other disputes, claims and assessments, and

•	expected actions of governments, governmental agencies, gas suppliers, courts, tribunals or other third parties.

We believe that we have a reasonable basis for making such forward-looking statements. The forward-looking statements in this document are based on our experience, our perception of trends, current conditions and expected future developments as well as other factors. Certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections that are included in these forward-looking statements, including, without limitation, future expectations and assumptions concerning the following:

•	the supply of, demand for and price of methanol, methanol derivatives, natural gas, coal, oil and oil derivatives,

 

•	our ability to procure natural gas feedstock on commercially acceptable terms,

•	operating rates of our facilities,

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 16

MANAGEMENT’S DISCUSSION AND ANALYSIS

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•	receipt or issuance of third-party consents or approvals, including, without limitation, governmental registrations of land title and related mortgages in Egypt and governmental approvals related to rights to purchase natural gas,

•	the establishment of new fuel standards,

•	operating costs, including natural gas feedstock and logistics costs, capital costs, tax rates, cash flows, foreign exchange rates and interest rates,

•	the availability of committed credit facilities and other financing,

 

•	global and regional economic activity (including industrial production levels),

•	absence of a material negative impact from major natural disasters,

•	absence of a material negative impact from changes in laws or regulations,

•	absence of a material negative impact from political instability in the countries in which we operate, and

•	enforcement of contractual arrangements and ability to perform contractual obligations by customers, natural gas and other suppliers and other third parties.

However, forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The risks and uncertainties primarily include those attendant with producing and marketing methanol and successfully carrying out major capital expenditure projects in various jurisdictions, including, without limitation:

•	conditions in the methanol and other industries including fluctuations in the supply, demand and price for methanol and its derivatives, including demand for methanol for energy uses,

•	the price of natural gas, coal, oil and oil derivatives,

•	our ability to obtain natural gas feedstock on commercially acceptable terms to underpin current operations and future production growth opportunities,

•	the ability to carry out corporate initiatives and strategies,

•	actions of competitors, suppliers and financial institutions,

•	conditions within the natural gas delivery systems that may prevent delivery of our natural gas supply requirements,

 

•	competing demand for natural gas, especially with respect to domestic needs for gas and electricity in Chile and Egypt,

•	actions of governments and governmental authorities, including, without limitation, implementation of policies or other measures that could impact the supply of or demand for methanol or its derivatives,

•	changes in laws or regulations,

•	import or export restrictions, anti-dumping measures, increases in duties, taxes and government royalties, and other actions by governments that may adversely affect our operations or existing contractual arrangements,

•	world-wide economic conditions, and

•	other risks described in our 2016 Annual Management’s Discussion and Analysis and this Second Quarter 2017 Management’s Discussion and Analysis.

Having in mind these and other factors, investors and other readers are cautioned not to place undue reliance on forward-looking statements. They are not a substitute for the exercise of one’s own due diligence and judgment. The outcomes implied by forward-looking statements may not occur and we do not undertake to update forward-looking statements except as required by applicable securities laws.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 17

MANAGEMENT’S DISCUSSION AND ANALYSIS

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Methanex Corporation

Consolidated Statements of Income (Loss) (unaudited)

(thousands of U.S. dollars, except number of common shares and per share amounts)

	Three Months Ended							Six Months Ended
	Jun 30 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Revenue	$	669,164		$	467,893			$	1,479,513		$	902,746
Cost of sales and operating expenses	(502,396		)	(430,071		)		(1,061,710		)	(833,822		)
Depreciation and amortization	(61,009		)	(58,494		)		(116,981		)	(111,473		)
Argentina gas settlement	—			32,500				—			32,500
Operating income (loss)	105,759			11,828				300,822			(10,049		)
Earnings of associate (note 4)	21,766			2,314				38,755			2,087
Finance costs	(23,312		)	(21,858		)		(46,629		)	(42,859		)
Finance income and other expenses	5,625			(113		)		5,628			2,988
Income (loss) before income taxes	109,838			(7,829		)		298,576			(47,833		)
Income tax recovery (expense):
Current	(15,530		)	(10,892		)		(40,938		)	(26,329		)
Deferred	6,482			11,474				(5,820		)	36,549
	(9,048		)	582				(46,758		)	10,220
Net income (loss)	$	100,790		$	(7,247	)		$	251,818		$	(37,613	)
Attributable to:
Methanex Corporation shareholders	$	84,146		$	(2,877	)		$	215,715		$	(26,275	)
Non-controlling interests	16,644			(4,370		)		36,103			(11,338		)
	$	100,790		$	(7,247	)		$	251,818		$	(37,613	)
Income (loss) per common share for the period attributable to Methanex Corporation shareholders
Basic net income (loss) per common share	$	0.96		$	(0.03	)		$	2.43		$	(0.29	)
Diluted net income (loss) per common share (note 6)	$	0.89		$	(0.08	)		$	2.39		$	(0.34	)
Weighted average number of common shares outstanding (note 6)	87,692,627			89,796,238				88,728,106			89,757,698
Diluted weighted average number of common shares outstanding (note 6)	88,057,502			89,876,849				89,164,211			89,821,964

See accompanying notes to condensed consolidated interim financial statements.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 1

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

(thousands of U.S. dollars)

	Three Months Ended							Six Months Ended
	Jun 30 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Net income (loss)	$	100,790		$	(7,247	)		$	251,818		$	(37,613	)
Other comprehensive income (loss):
Items that may be reclassified to income:
Change in fair value of cash flow hedges (note 9)	(24,252		)	116,548				(78,754		)	66,829
Forward element excluded from hedging relationships (note 9)	24,580			(95,947		)		59,113			(64,237		)
Taxes on above items	9			(6,845		)		6,565			(830		)
	337			13,756				(13,076		)	1,762
Comprehensive income (loss)	$	101,127		$	6,509			$	238,742		$	(35,851	)
Attributable to:
Methanex Corporation shareholders	$	84,483		$	10,879			$	202,639		$	(24,513	)
Non-controlling interests	16,644			(4,370		)		36,103			(11,338		)
	$	101,127		$	6,509			$	238,742		$	(35,851	)

See accompanying notes to condensed consolidated interim financial statements.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 2

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Consolidated Statements of Financial Position (unaudited)

(thousands of U.S. dollars)

AS AT	Jun 30 2017			Dec 31 2016
ASSETS
Current assets:
Cash and cash equivalents	$	361,333		$	223,890
Trade and other receivables	498,301			499,603
Inventories (note 2)	282,937			281,328
Prepaid expenses	30,479			20,846
	1,173,050			1,025,667
Non-current assets:
Property, plant and equipment (note 3)	3,056,821			3,117,469
Investment in associate (note 4)	191,435			197,402
Deferred income tax assets	134,532			137,341
Other assets	82,383			78,784
	3,465,171			3,530,996
	$	4,638,221		$	4,556,663
LIABILITIES AND EQUITY
Current liabilities:
Trade, other payables and accrued liabilities	$	589,929		$	523,216
Current maturities on long-term debt (note 5)	55,534			53,997
Current maturities on other long-term liabilities	31,521			29,720
	676,984			606,933
Non-current liabilities:
Long-term debt (note 5)	1,475,618			1,502,209
Other long-term liabilities	363,598			351,191
Deferred income tax liabilities	288,434			290,980
	2,127,650			2,144,380
Equity:
Capital stock	494,553			511,465
Contributed surplus	2,331			2,568
Retained earnings	1,159,349			1,124,104
Accumulated other comprehensive loss	(54,378		)	(41,302		)
Shareholders' equity	1,601,855			1,596,835
Non-controlling interests	231,732			208,515
Total equity	1,833,587			1,805,350
	$	4,638,221		$	4,556,663

See accompanying notes to condensed consolidated interim financial statements.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 3

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Consolidated Statements of Changes in Equity (unaudited)

(thousands of U.S. dollars, except number of common shares)

	Number of Common Shares		Capital Stock		Contributed Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Shareholders' Equity		Non- Controlling Interests		Total Equity
Balance, December 31, 2015	89,671,198		$509,464		$2,426		$1,235,615		$(27,776)		$1,719,729		$248,844		$1,968,573
Net loss	—		—		—		(26,275	)	—		(26,275	)	(11,338	)	(37,613	)
Other comprehensive income	—		—		—		—		1,762		1,762		—		1,762
Compensation expense recorded for stock options	—		—		379		—		—		379		—		379
Issue of shares on exercise of stock options	125,040		798		—		—		—		798		—		798
Reclassification of grant date fair value on exercise of stock options	—		257		(257	)	—		—		—		—		—
Dividend payments to Methanex Corporation shareholders	—		—		—		(49,399	)	—		(49,399	)	—		(49,399	)
Distributions made and accrued to non-controlling interests	—		—		—		—		—		—		(11,636	)	(11,636	)
Equity contributions by non-controlling interests	—		—		—		—		—		—		525		525
Balance, June 30, 2016	89,796,238		$510,519		$2,548		$1,159,941		$(26,014)		$1,646,994		$226,395		$1,873,389
Net income (loss)	—		—		—		13,730		—		13,730		(4,342	)	9,388
Other comprehensive loss	—		—		—		(169	)	(15,288)		(15,457	)	—		(15,457	)
Compensation expense recorded for stock options	—		—		258		—		—		258		—		258
Issue of shares on exercise of stock options	28,100		708		—		—		—		708		—		708
Reclassification of grant date fair value on exercise of stock options	—		238		(238	)	—		—		—		—		—
Dividend payments to Methanex Corporation shareholders	—		—		—		(49,398	)	—		(49,398	)	—		(49,398	)
Distributions made and accrued to non-controlling interests	—		—		—		—		—		—		(13,038	)	(13,038	)
Equity contributions by non-controlling interests	—		—		—		—		—		—		(500	)	(500	)
Balance, December 31, 2016	89,824,338		$511,465		$2,568		$1,124,104		$(41,302)		$1,596,835		$208,515		$1,805,350
Net income	—		—		—		215,715		—		215,715		36,103		251,818
Other comprehensive loss	—		—		—		—		(13,076)		(13,076	)	—		(13,076	)
Compensation expense recorded for stock options	—		—		266		—		—		266		—		266
Issue of shares on exercise of stock options	54,720		1,597		—		—		—		1,597		—		1,597
Reclassification of grant date fair value on exercise of stock options	—		503		(503	)	—		—		—		—		—
Payment for shares repurchased	(3,330,000	)	(19,012	)	—		(129,687	)	—		(148,699	)	—		(148,699	)
Dividend payments to Methanex Corporation shareholders	—		—		—		(50,783	)	—		(50,783	)	—		(50,783	)
Distributions made and accrued to non-controlling interests	—		—		—		—		—		—		(12,886	)	(12,886	)
Balance, June 30, 2017	86,549,058		$494,553		$2,331		$1,159,349		$(54,378)		$1,601,855		$231,732		$1,833,587

See accompanying notes to condensed consolidated interim financial statements.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 4

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Consolidated Statements of Cash Flows (unaudited)

(thousands of U.S. dollars)

	Three Months Ended							Six Months Ended
	Jun 30 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES
Net income (loss)	$	100,790		$	(7,247	)		$	251,818		$	(37,613	)
Deduct earnings of associate	(21,766		)	(2,314		)		(38,755		)	(2,087		)
Dividends received from associate	20,192			3,155				44,801			31,550
Add (deduct) non-cash items:
Depreciation and amortization	61,009			58,494				116,981			111,473
Income tax expense (recovery)	9,048			(582		)		46,758			(10,220		)
Share-based compensation expense (recovery)	(7,880		)	(3,535		)		4,630			(652		)
Finance costs	23,312			21,858				46,629			42,859
Other	1,212			1,742				2,617			2,129
Income taxes paid	(7,214		)	(1,514		)		(11,877		)	(2,084		)
Other cash payments, including share-based compensation	(1,039		)	(11,754		)		(6,993		)	(17,664		)
Cash flows from operating activities before undernoted	177,664			58,303				456,609			117,691
Changes in non-cash working capital (note 8)	72,098			(24,506		)		13,807			(13,916		)
	249,762			33,797				470,416			103,775
CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES
Payments for repurchase of shares	(114,957		)	—				(148,699		)	—
Dividend payments to Methanex Corporation shareholders	(26,062		)	(24,694		)		(50,783		)	(49,399		)
Interest paid	(26,780		)	(25,362		)		(42,286		)	(38,736		)
Net proceeds on issue of long-term debt	—			35,007				—			39,600
Repayment of long-term debt	(2,087		)	(918		)		(26,601		)	(22,984		)
Finance leases	(1,508		)	(1,411		)		(3,352		)	(2,357		)
Equity contributions by non-controlling interests	—			525				—			525
Distributions to non-controlling interests	—			—				—			(500		)
Proceeds on issue of shares on exercise of stock options	38			—				1,597			798
Changes in non-cash working capital related to financing activities (note 8)	(6,638		)	(5,689		)		(10,605		)	(11,154		)
	(177,994		)	(22,542		)		(280,729		)	(84,207		)
CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES
Property, plant and equipment	(29,479		)	(45,857		)		(49,056		)	(61,307		)
Other assets	—			—				—			(66		)
Changes in non-cash working capital related to investing activities (note 8)	3,911			(1,439		)		(3,188		)	25,841
	(25,568		)	(47,296		)		(52,244		)	(35,532		)
Increase (decrease) in cash and cash equivalents	46,200			(36,041		)		137,443			(15,964		)
Cash and cash equivalents, beginning of period	315,133			275,011				223,890			254,934
Cash and cash equivalents, end of period	$	361,333		$	238,970			$	361,333		$	238,970

See accompanying notes to condensed consolidated interim financial statements.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 5

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

Except where otherwise noted, tabular dollar amounts are stated in thousands of U.S. dollars.

1.	Basis of presentation:

Methanex Corporation ("the Company") is an incorporated entity with corporate offices in Vancouver, Canada. The Company’s operations consist of the production and sale of methanol, a commodity chemical. The Company is the world’s largest producer and supplier of methanol to the major international markets of Asia Pacific, North America, Europe and South America.

These condensed consolidated interim financial statements are prepared in accordance with International Accounting Standards ("IAS") 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB") on a basis consistent with those followed in the most recent annual consolidated financial statements.

These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and were approved and authorized for issue by the Audit, Finance & Risk Committee of the Board of Directors on July 26, 2017 .

These condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2016 .

In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers ("IFRS 15") establishing a comprehensive framework for revenue recognition. The standard replaces IAS 18, Revenue and IAS 11, Construction Contracts and related interpretations and is effective for annual periods beginning on or after January 1, 2018. The Company has performed a preliminary assessment of the impact of the new standard and currently anticipates no significant impact on its consolidated financial statements, with the assessment to be finalized in the second half of 2017.

2.	Inventories:

Inventories are valued at the lower of cost, determined on a first-in first-out basis, and estimated net realizable value. The amount of inventories recognized as an expense in cost of sales and operating expenses and depreciation and amortization for the three and six month periods ended June 30, 2017 is $507 million (2016 - $426 million) and $1,051 million (2016 - $812 million), respectively.

3.	Property, plant and equipment:

	Buildings, Plant Installations & Machinery			Finance Leases			Other			Total
Cost at June 30, 2017	$	4,597,387		$	215,008		$	272,071		$	5,084,466
Accumulated depreciation at June 30, 2017	1,856,283			26,083			145,279			2,027,645
Net book value at June 30, 2017	$	2,741,104		$	188,925		$	126,792		$	3,056,821
Cost at December 31, 2016	$	4,549,816		$	206,260		$	272,878		$	5,028,954
Accumulated depreciation at December 31, 2016	1,752,540			18,557			140,388			1,911,485
Net book value at December 31, 2016	$	2,797,276		$	187,703		$	132,490		$	3,117,469

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 6

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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4.	Interest in Atlas joint venture:

a)	The Company has a 63.1% equity interest in Atlas Methanol Company Unlimited ("Atlas"). Atlas owns a 1.8 million tonne per year methanol production facility in Trinidad. The Company accounts for its interest in Atlas using the equity method. Summarized financial information of Atlas (100% basis) is as follows:

Statements of financial position	Jun 30 2017			Dec 31 2016
Cash and cash equivalents	$	10,299		$	15,530
Other current assets	92,908			45,219
Non-current assets	306,841			324,297
Current liabilities	(63,353		)	(24,783		)
Other long-term liabilities, including current maturities	(164,267		)	(168,253		)
Net assets at 100%	182,428			192,010
Net assets at 63.1%	115,112			121,158
Long-term receivable from Atlas	76,323			76,244
Investment in associate	$	191,435		$	197,402

	Three Months Ended							Six Months Ended
Statements of income	Jun 30 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Revenue	$	128,189		$	45,604			$	243,398		$	67,977
Cost of sales and depreciation and amortization	(71,627		)	(33,244		)		(142,044		)	(51,420		)
Operating income	56,562			12,360				101,354			16,557
Finance costs, finance income and other expenses	(2,874		)	(3,488		)		(5,752		)	(6,580		)
Income tax expense	(19,193		)	(5,205		)		(34,183		)	(6,670		)
Net earnings at 100%	34,495			3,667				61,419			3,307
Earnings of associate at 63.1%	21,766			$	2,314			38,755			2,087
Dividends received from associate	$	20,192		$	3,155			$	44,801		$	31,550

b)	Contingent liability:

The Board of Inland Revenue of Trinidad and Tobago has issued assessments against Atlas in respect of the 2005 to 2010 financial years. All subsequent tax years remain open to assessment. The assessments relate to the pricing arrangements of certain long-term fixed price sales contracts from 2005 to 2019 related to methanol produced by Atlas. Atlas had partial relief from corporation income tax until late July 2014.

The Company has lodged objections to the assessments. Based on the merits of the cases and legal interpretation, management believes its position should be sustained.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 7

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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5.	Long-term debt:

As at	Jun 30 2017			Dec 31 2016
Unsecured notes
$350 million at 3.25% due December 15, 2019	$	347,589		$	347,126
$250 million at 5.25% due March 1, 2022	247,876			247,685
$300 million at 4.25% due December 1, 2024	296,699			296,529
$300 million at 5.65% due December 1, 2044	295,120			295,084
	1,187,284			1,186,424
Egypt limited recourse debt facilities	266,775			288,515
Other limited recourse debt facilities	77,093			81,267
Total long-term debt 1	1,531,152			1,556,206
Less current maturities	(55,534		)	(53,997		)
	$	1,475,618		$	1,502,209

1	Long-term debt is presented net of deferred financing fees.

During the quarter ended June 30, 2017 , the Company made repayments of $2.1 million on its other limited recourse debt facilities. Other limited recourse debt facilities relates to financing for certain of our ocean going vessels which we own through less than wholly-owned entities under the Company's control.

The Company maintains a $300 million committed revolving credit facility with a syndicate of highly rated financial institutions that expires in December 2019. Significant covenant and default provisions of the facility include:

a) the obligation to maintain an EBITDA to interest coverage ratio of greater than 2:1 calculated on a four-quarter trailing basis and a debt to capitalization ratio of less than or equal to 55%, both ratios calculated in accordance with definitions in the credit agreement that include adjustments to the limited recourse subsidiaries,

b) a default if payment is accelerated by a creditor on any indebtedness of $50 million or more of the Company and its subsidiaries, except for the limited recourse subsidiaries, and

c) a default if a default occurs that permits a creditor to demand repayment on any other indebtedness of $50 million or more of the Company and its subsidiaries, except for the limited recourse subsidiaries.

The limited recourse debt facilities are described as limited recourse as they are secured only by the assets of the entity that carries the debt. Accordingly, the lenders to the limited recourse debt facilities have no recourse to the Company or its other subsidiaries.

The Egypt limited recourse debt facilities have covenants and default provisions that apply only to the Egypt entity, including restrictions on the incurrence of additional indebtedness and a requirement to fulfill certain conditions before the payment of cash or other shareholder distributions. Certain conditions have not been met, resulting in a restriction on shareholder distributions from the Egypt entity. As of June 30, 2017, the Egypt cash balance on a 100% ownership basis was $109 million . The Egypt entity continues to be able to fully utilize its funds for operating, capital and financing needs, including the repayment of the Egypt limited recourse debt facilities.

Failure to comply with any of the covenants or default provisions of the long-term debt facilities described above could result in a default under the applicable credit agreement that would allow the lenders to not fund future loan requests, accelerate the due date of the principal and accrued interest on any outstanding loans or restrict the payment of cash or other distributions.

As at June 30, 2017 , management believes the Company was in compliance with all significant terms and default provisions related to long-term debt obligations.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 8

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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6.	Net income (loss) per common share:

Diluted net income (loss) per common share is calculated by considering the potential dilution that would occur if outstanding stock options and, under certain circumstances, tandem share appreciation rights ("TSARs") were exercised or converted to common shares.

Outstanding TSARs may be settled in cash or common shares at the holder’s option and for purposes of calculating diluted net income (loss) per common share, the more dilutive of the cash-settled and equity-settled method is used, regardless of how the plan is accounted for. Accordingly, TSARs that are accounted for using the cash-settled method will require adjustments to the numerator and denominator if the equity-settled method is determined to have a dilutive effect on diluted net income (loss) per common share as compared to the cash-settled method. For all periods presented, the equity-settled method was more dilutive and an adjustment was required for both the numerator and the denominator.

Stock options and, if calculated using the equity-settled method, TSARs are considered dilutive when the average market price of the Company’s common shares during the period disclosed exceeds the exercise price of the stock option or TSAR. For the three and six months ended June 30, 2017 , stock options were considered dilutive resulting in an adjustment to the denominator. For the three and six months ended June 30, 2016 , the Company incurred a net loss attributable to Methanex shareholders and therefore exclusion of the stock options was more dilutive.

A reconciliation of the numerator used for the purpose of calculating diluted net income (loss) per common share is as follows:

	Three Months Ended							Six Months Ended
	Jun 30 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Numerator for basic net income (loss) per common share	$	84,146		$	(2,877	)		$	215,715		$	(26,275	)
Adjustment for the effect of TSARs:
Cash-settled expense (recovery) included in net income	(3,895		)	(2,252		)		1,431			(675		)
Equity-settled expense	(1,860		)	(1,793		)		(3,774		)	(3,656		)
Numerator for diluted net income (loss) per common share	$	78,391		$	(6,922	)		$	213,372		$	(30,606	)

A reconciliation of the denominator used for the purposes of calculating diluted net income (loss) per common share is as follows:

	Three Months Ended					Six Months Ended
	Jun 30 2017		Jun 30 2016			Jun 30 2017		Jun 30 2016
Denominator for basic net income (loss) per common share	87,692,627		89,796,238			88,728,106		89,757,698
Effect of dilutive stock options	40,091		—			54,153		—
Effect of dilutive TSARs	324,784		80,611			381,952		64,266
Denominator for diluted net income (loss) per common share	88,057,502		89,876,849			89,164,211		89,821,964

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 9

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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7.	Share-based compensation:

a)	Share appreciation rights ("SARs"), TSARs and stock options:

(i)	Outstanding units:

Information regarding units outstanding at June 30, 2017 is as follows:

	SARs					TSARs
(per share amounts in USD)	Number of Units		Weighted Average Exercise Price			Number of Units		Weighted Average Exercise Price
Outstanding at December 31, 2016	1,511,485		$42.68			2,416,111		$42.10
Granted	167,600		50.15			340,200		50.17
Exercised	(88,106	)	27.13			(118,305	)	27.17
Expired	(5,000	)	25.22			—		—
Outstanding at March 31, 2017	1,585,979		$44.39			2,638,006		$43.81
Exercised	(7,349	)	34.51			(2,000	)	34.59
Cancelled	(10,801	)	50.18			(2,200	)	34.59
Outstanding at June 30, 2017	1,567,829		$44.39			2,633,806		$43.82

	Stock Options
(per share amounts in USD)	Number of Units		Weighted Average Exercise Price
Outstanding at December 31, 2016	344,767		$40.91
Granted	31,400		50.17
Exercised	(53,620	)	29.07
Cancelled	(5,200	)	55.22
Outstanding at March 31, 2017	317,347		$43.59
Exercised	(1,100	)	34.59
Outstanding at June 30, 2017	316,247		$43.62

	Units Outstanding at June 30, 2017							Units Exercisable at June 30, 2017
Range of Exercise Prices (per share amounts in USD)	Weighted Average Remaining Contractual Life (Years)		Number of Units Outstanding		Weighted Average Exercise Price			Number of Units Exercisable		Weighted Average Exercise Price
SARs:
$25.97 to $35.51	3.65		660,910		$32.70			421,222		$31.62
$38.24 to $73.13	4.24		906,919		52.91			643,511		53.23
	3.99		1,567,829		$44.39			1,064,733		$44.68
TSARs:
$25.97 to $35.51	3.56		1,107,125		$32.74			728,980		$31.78
$38.24 to $73.13	4.27		1,526,681		51.86			1,054,338		51.93
	3.97		2,633,806		$43.82			1,783,318		$43.64
Stock options:
$25.97 to $35.51	3.38		142,250		$32.48			96,246		$31.48
$38.24 to $73.13	4.19		173,997		52.73			125,758		52.98
	3.82		316,247		$43.62			222,004		$43.65

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 10

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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(ii)	Compensation expense related to SARs and TSARs:

Compensation expense for SARs and TSARs is measured based on their fair value and is recognized over the vesting period. Changes in fair value each period are recognized in net income for the proportion of the service that has been rendered at each reporting date. The fair value at June 30, 2017 was $39.1 million compared with the recorded liability of $34.8 million. The difference between the fair value and the recorded liability of $4.3 million will be recognized over the weighted average remaining vesting period of approximately 1.7 years. The weighted average fair value was estimated at June 30, 2017 using the Black-Scholes option pricing model.

For the three and six month periods ended June 30, 2017 , compensation expense related to SARs and TSARs included a recovery in cost of sales and operating expenses of $6.6 million ( 2016 - recovery of $3.5 million) and an expense of $2.5 million (2016 - recovery of $1.1 million), respectively. This included a recovery of $9.1 million ( 2016 - recovery of $5.7 million) and a recovery of $2.7 million (2016 - recovery of $6.2 million), respectively, related to the effect of the change in the Company’s share price for the three and six month periods ended June 30, 2017 .

(iii)	Compensation expense related to stock options:

For the three and six month periods ended June 30, 2017 , compensation expense related to stock options included in cost of sales and operating expenses was $0.1 million ( 2016 - $0.2 million) and $0.3 million (2016 - 0.4 million), respectively. The fair value of each stock option grant was estimated on the grant date using the Black-Scholes option pricing model

b)	Deferred, restricted and performance share units:

Deferred, restricted and performance share units outstanding at June 30, 2017 are as follows:

	Number of Deferred Share Units		Number of Restricted Share Units		Number of Performance Share Units
Outstanding at December 31, 2016	251,017		18,649		572,272
Granted	6,505		8,100		163,500
Performance factor impact on redemption 1	—		—		(102,557	)
Granted in-lieu of dividends	1,424		160		3,551
Redeemed	(13,789	)	—		(34,186	)
Cancelled	—		—		(3,967	)
Outstanding at March 31, 2017	245,157		26,909		598,613
Granted	1,462		—		—
Granted in-lieu of dividends	1,665		189		4,205
Cancelled	—		—		(2,353	)
Outstanding at June 30, 2017	248,284		27,098		600,465

1	Performance share units have a feature where the ultimate number of units that vest are adjusted by a performance factor of the original grant as determined by the Company’s total shareholder return in relation to a predetermined target over the period to vesting. These units relate to performance share units redeemed in the quarter ended March 31, 2017.

Compensation expense for deferred, restricted and performance share units is measured at fair value based on the market value of the Company’s common shares and is recognized over the vesting period. Changes in fair value are recognized in net income for the proportion of the service that has been rendered at each reporting date. The fair value of deferred, restricted and performance share units at June 30, 2017 was $19.7 million compared with the recorded liability of $17.2 million. The difference between the fair value and the recorded liability of $2.5 million will be recognized over the weighted average remaining vesting period of approximately 1.7 years.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 11

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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For the three and six month periods ended June 30, 2017 , compensation expense related to deferred, restricted and performance share units included in cost of sales and operating expenses was a recovery of $1.6 million ( 2016 - recovery of $0.2 million) and an expense of $2.5 million (2016 - expense of $0.2 million), respectively. This included a recovery of $2.6 million ( 2016 - recovery of $1.1 million) and an expense of $0.6 million (2016 - recovery of $1.8 million), respectively, related to the effect of the change in the Company’s share price for the three and six month periods ended June 30, 2017 .

8.	Changes in non-cash working capital:

Changes in non-cash working capital for the three and six month periods ended June 30, 2017 and 2016 were as follows:

	Three Months Ended							Six Months Ended
	Jun 30 2017			Jun 30 2016				Jun 30 2017			Jun 30 2016
Changes in non-cash working capital:
Trade and other receivables	$	15,275		$	(21,261	)		$	1,302		$	98,495
Inventories	68,426			(7,281		)		(1,609		)	(472		)
Prepaid expenses	(7,037		)	(5,768		)		(9,633		)	(217		)
Trade, other payables and accrued liabilities	15,042			12,688				66,713			(64,387		)
	91,706			(21,622		)		56,773			33,419
Adjustments for items not having a cash effect and working capital changes relating to taxes and interest paid	(22,335		)	(10,012		)		(56,759		)	(32,648		)
Changes in non-cash working capital having a cash effect	$	69,371		$	(31,634	)		$	14		$	771
These changes relate to the following activities:
Operating	$	72,098		$	(24,506	)		$	13,807		$	(13,916	)
Financing	(6,638		)	(5,689		)		(10,605		)	(11,154		)
Investing	3,911			(1,439		)		(3,188		)	25,841
Changes in non-cash working capital	$	69,371		$	(31,634	)		$	14		$	771

9. Financial instruments:

Financial instruments are either measured at amortized cost or fair value.

In the normal course of business, the Company's assets, liabilities and forecasted transactions, as reported in U.S. dollars, are impacted by various market risks including, but not limited to, natural gas prices and currency exchange rates. The time frame and manner in which the Company manages those risks varies for each item based on the Company's assessment of the risk and the available alternatives for mitigating risks.

The Company uses derivatives as part of its risk management program to mitigate variability associated with changing market values. Changes in fair value of derivative financial instruments are recorded in earnings unless the instruments are designated as cash flow hedges. The Company designates as cash flow hedges derivative financial instruments to hedge its risk exposure to fluctuations in natural gas prices and derivative financial instruments to hedge its risk exposure to fluctuations in the euro compared to the U.S. dollar.

The fair value of derivative instruments is determined based on industry-accepted valuation models using market observable inputs and are classified within Level 2 of the fair value hierarchy. The fair value of all of the Company's derivative contracts as presented in the consolidated statements of financial position are determined based on present values and the discount rates used are adjusted for credit risk. The effective portion of the changes in fair value of derivative financial instruments designated as cash flow hedges is recorded in other comprehensive income. The spot element of forward contracts in the hedging relationships is recorded in other comprehensive income as the change in fair value of cash flow hedges. The change in the fair value of the forward element of forward contracts is recorded separately in other comprehensive income as the forward element excluded from hedging relationship.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 12

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Until settled, the fair value of the derivative financial instruments will fluctuate based on changes in commodity prices or foreign currency exchange rates.

Natural gas forward contracts

The Company manages its exposure to changes in natural gas prices for a portion of its North American natural gas requirements by executing a number of fixed price forward contracts.

The Company has entered into forward contracts to manage its exposure to changes in natural gas prices for the Geismar 2 facility which it has designated as cash flow hedges. The Company has also entered into physical forward contracts to manage its exposure to changes in natural gas prices for the Medicine Hat facility over the period 2017 to 2022. The Company has designated contracts for the 2021 and 2022 periods as cash flow hedges for its highly probable forecast natural gas purchases in Medicine Hat. Other costs incurred to transport natural gas from the contracted delivery point, either Henry Hub or AECO, to the relevant production facility represent an insignificant portion of the overall underlying risk and are recognized as incurred outside of the hedging relationship.

As at June 30, 2017 , the Company had outstanding forward contracts designated as cash flow hedges with a notional amount of $482 million (December 31, 2016 - $484 million ) and a net negative fair value of $78.3 million (December 31, 2016 - $61.9 million ) included in other long-term liabilities.

Euro forward exchange contracts

The Company manages its foreign currency exposure to euro denominated sales by executing a number of forward contracts which it has designated as cash flow hedges for its highly probable forecast euro collections.

As at June 30, 2017 , the Company had outstanding forward exchange contracts designated as cash flow hedges to sell a notional amount of 117 million euros (December 31, 2016 - 92 million euros). The euro contracts had a negative fair value of $3.0 million included in current liabilities (December 31, 2016 - positive fair value $0.3 million included in current assets).

Fair value

The fair value of the Company’s derivative financial instruments as disclosed above are determined based on Bloomberg quoted market prices and confirmations received from counterparties, which are adjusted for credit risk.

The table below shows the nominal net cash flows for derivative hedging instruments, excluding credit risk adjustments, based upon contracted settlement dates. The amounts reflect the maturity profile of the hedging instruments and are subject to change based on the prevailing market rate at each of the future settlement dates. Financial asset derivative positions are held with investment-grade counterparties and therefore the settlement day risk exposure is considered to be negligible.

	Cash outflows by term to maturity
	1 year or less		1-3 years		3-5 years		More than 5 years		Total
Natural gas forward contracts	(1,839	)	(13,919	)	(21,557	)	(54,574	)	$	(91,889	)
Euro forward exchange contracts	(3,005	)	—		—		—		$	(3,005	)

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 13

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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The carrying values of the Company’s financial instruments approximate their fair values, except as follows:

	June 30, 2017
As at	Carrying Value			Fair Value
Long-term debt excluding deferred financing fees	$	1,542,577		$	1,552,842

Long-term debt consists of limited recourse debt facilities and unsecured notes. There is no publicly traded market for the limited recourse debt facilities. The fair value of the limited recourse debt facilities as disclosed on a recurring basis and categorized as Level 2 within the fair value hierarchy is estimated by reference to current market rates as at the reporting date. The fair value of the unsecured notes disclosed on a recurring basis and also categorized as Level 2 within the fair value hierarchy is estimated using quoted prices and yields as at the reporting date. The fair value of the Company’s long term debt will fluctuate until maturity.

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 14

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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Methanex Corporation

Quarterly History (unaudited)

	2017		Q2		Q1		2016		Q4		Q3		Q2		Q1
METHANOL SALES VOLUME
(thousands of tonnes)
Methanex-produced   1	3,546		1,790		1,756		6,828		1,750		1,860		1,689		1,529
Purchased methanol	899		387		512		1,892		526		411		533		422
Commission sales   1	601		297		304		758		245		205		140		168
	5,046		2,474		2,572		9,478		2,521		2,476		2,362		2,119
METHANOL PRODUCTION
(thousands of tonnes)
New Zealand	883		350		533		2,181		536		559		577		509
Geismar (Louisiana, USA)	930		437		493		2,055		526		519		527		483
Trinidad (Methanex interest)	845		449		396		1,605		455		420		417		313
Egypt (50% interest)	318		159		159		293		96		69		53		75
Medicine Hat (Canada)	277		159		118		488		92		114		123		159
Chile	227		60		167		395		154		68		73		100
	3,480		1,614		1,866		7,017		1,859		1,749		1,770		1,639
AVERAGE REALIZED METHANOL PRICE   2
($/tonne)	347		327		365		242		278		236		223		230
($/gallon)	1.04		0.98		1.10		0.73		0.84		0.71		0.67		0.69
PER SHARE INFORMATION ($ per common share attributable to Methanex shareholders)
Adjusted net income (loss)	2.40		0.85		1.56		(0.17	)	0.46		(0.01	)	(0.34	)	(0.27	)
Basic net income (loss)	2.43		0.96		1.47		(0.14	)	0.28		(0.12	)	(0.03	)	(0.26	)
Diluted net income (loss)	2.39		0.89		1.46		(0.14	)	0.28		(0.12	)	(0.08	)	(0.26	)

1

Methanex-produced methanol represents our equity share of volume produced at our facilities and excludes volume marketed on a commission basis related to the 36.9% of the Atlas facility and 50% of the Egypt facility that we do not own. Methanex-produced methanol includes any volume produced by Chile using natural gas supplied from Argentina under a tolling arrangement ("Tolling Volume"). There has been no Tolling Volume produced since the fourth quarter of 2015.

2	Average realized price is calculated as revenue, excluding commissions earned and the Egypt non-controlling interest share of revenue, but including an amount representing our share of Atlas revenue, divided by the total sales volume of Methanex-produced and purchased methanol, but excluding Tolling Volume.

 

METHANEX CORPORATION 2017 SECOND QUARTER    PAGE 15

QUARTERLY HISTORY (UNAUDITED)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized.

	METHANEX CORPORATION
Date: July 26, 2017	By:	/s/ KEVIN PRICE
		Name:		Kevin Price
		Title:		General Counsel and Corporate Secretary

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