Saudi Arabia's Yanbu National Petrochemical, also known as Yansab, could face two challenging quarters on lower oil prices amid concerns about a slowing US economy and the worsening European debt crisis, Al Rajhi Capital said yesterday.
The unit of Saudi Basic Industries, the world's biggest petrochemicals maker, is expected to suffer declines in product prices of 7 per cent in the third quarter and 3 per cent in the fourth quarter as Brent crude for September trades at US$107.83 a barrel, down from $116.81 earlier this month.
The average prices of Yansab's two main products, ethylene and polyethylene, declined by 16 per cent and 7 per cent respectively last month, compared with the average price in the second quarter. The price of ethylene is currently at $1,284 per tonne while polyethylene is at $1,358 per tonne.
Earlier this year, analysts expected Saudi petrochemical stocks to outperform global rivals with margins driven by cheap feedstock costs and improving demand, along with supply concerns because of unplanned shutdowns in Asia.
But that outlook has drastically changed over the course of a month.
This month has sent financial markets on a roller coaster, with fears rising that world economies could return to recession, a debt deal in the US insufficient to prevent a downgrading of the American government's top-tier credit rating and an escalation of debt problems in the euro zone.
The chances of a new global recession have risen, although the more likely outcome is a period of low economic growth.
"We may revise our price estimates further in the event of major negative macroeconomic developments in the US or Europe, affecting oil prices severely," the note from Al Rajhi Capital analysts said.
Yansab is forecast to report a 10 per cent decline in revenues to 2.4 billion riyals and a 15 per cent decline in profits to 819 million riyals in the third quarter, compared with the previous quarter.
Yansab has fallen by almost 10 per cent since the start of this month. Its shares closed at 46.4 riyals on the Saudi Tadawul yesterday.
halsayegh@thenational.ae
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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The flights
Emirates and Etihad fly to Johannesburg or Cape Town daily. Flights cost from about Dh3,325, with a flying time of 8hours and 15 minutes. From there, fly South African Airlines or Air Namibia to Namibia’s Windhoek Hosea Kutako International Airport, for about Dh850. Flying time is 2 hours.
The stay
Wilderness Little Kulala offers stays from £460 (Dh2,135) per person, per night. It is one of seven Wilderness Safari lodges in Namibia; www.wilderness-safaris.com.
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