Hengyi Petrochemical's semi-annual report forecast has sent ripples through the textile industry, showcasing the explosive power of globalized布局. For the first half of 2026, the company, the only Chinese chemical fiber leader with an overseas refinery, expects net profit attributable to shareholders of RMB 5.5 to 6 billion, an increase of over 23 times year-on-year. Behind this figure lies the profit release from its Brunei refinery amid tight refined fuel supply-demand in Southeast Asia, and the initial success of anti-involution measures in the PTA and polyester sectors.
Brunei Refinery: The Continuous Roar of the Profit Engine
Hengyi's performance surge is no accident. In Q1 2026, net profit reached RMB 1.995 billion, up over 3,700% YoY; in Q2, as the tight supply-demand situation in Southeast Asia intensified, the Brunei refinery's profit elasticity further released, with single-quarter net profit estimated between RMB 3.505 billion and 4.005 billion, a sequential increase of 76% to 101%. Analysts point to the long-term shortage of refined fuel supply in Southeast Asia, with spreads widening significantly in Q1 2026, directly boosting refining margins.
The core advantage of the Brunei refinery lies in its location and policies. The supply-demand gap for refined fuel in Southeast Asia persists, with refining profits far exceeding domestic levels. Additionally, the refinery enjoys tax incentives, market-based pricing, and low transportation and insurance costs, achieving full production and full sales with high per-ton product margins. For Hengyi, the Brunei refinery has become the core pillar of current and future profit growth, with its unique locational advantage becoming increasingly prominent in industry competition.
Three Major Projects: From 'Refining and Chemical Fiber' to 'Oil-Coal-Fabric' Integration
While profits surged, Hengyi accelerated three strategic projects to build long-term momentum.
- The Brunei Phase II project is fully underway, with an optimized design capacity of 12 million tons per year, producing high-value products such as diesel, PX, and benzene, targeting completion by the end of 2028. Once built, the combined capacity of the Brunei refinery will reach 20 million tons per year, forming deep industrial synergy. This project is the only overseas capacity addition among recent private large-scale refineries, with high strategic scarcity.
- The Xinjiang coal-to-ethylene glycol project plans to produce 2.4 million tons annually of high-quality fiber-grade coal-to-ethylene glycol, expected to start production in the first half of 2028, reducing Hengyi's reliance on single crude oil feedstock.
- The Hubei Jingzhou circular new materials project is progressing simultaneously, planning a 300,000-ton annual demonstration project using waste textiles as raw material instead of crude oil, with an 18-month construction period. This project aligns with national 'dual carbon' goals and waste textile recycling policies, and upon completion, will form a unique 'oil, coal, fabric' industrial structure.
These three projects signify Hengyi's transformation from a traditional refining and chemical fiber leader into an integrated new materials company, significantly enhancing the stability of profits across the entire industrial chain.
Industry Impact: Implications for Buyers and Foreign Trade Enterprises
Hengyi's performance explosion sends multiple signals throughout the chemical fiber chain. First, supply-demand optimization in the PTA and polyester sectors is progressing substantively, with anti-involution measures showing initial results and profit recovery having sustainability. For downstream buyers, this means raw material price volatility may stabilize, but attention must be paid to changes in supplier capacity布局.
Second, the success of the Brunei refinery validates strong demand for refined fuel and chemicals in the Southeast Asian market. For foreign trade companies, especially those exporting chemical fiber raw materials, this highlights the need to closely monitor supply-demand dynamics in Southeast Asia and the capacity deployment pace of leading companies like Hengyi to adjust procurement and sales strategies.
Additionally, the advancement of the waste textile recycling project indicates that the industry's focus on environmental protection and circular economy is moving from concept to reality. Buyers can proactively monitor the supply potential of green raw materials like recycled fibers to prepare for future policy and market preference changes.
Risks and Outlook: Can High Prosperity Continue?
The market is widely concerned about whether Hengyi's profit surge can be sustained. From an industry logic perspective, the tight supply-demand balance for refined fuel in Southeast Asia is unlikely to reverse quickly in the short term, supporting high profitability for the Brunei refinery throughout the year. The capacity structure in the PTA and polyester sectors has been substantively optimized, with profit recovery having sustainability. Coupled with the continued ramp-up of the nylon project, the annual profit center is expected to shift permanently upward.
However, potential risks must be monitored: first, sharp fluctuations in international crude oil prices could lead to inventory write-downs and narrower crack spreads, directly impacting refining margins; second, projects like Brunei Phase II and coal-to-ethylene glycol involve large investments and long construction periods, posing risks of delays and capital strain; third, the concentration of core refining capacity in a single region (Brunei) exposes the company to changes in host country policies and geopolitical environment, which could impact cost advantages and raw material supply stability; fourth, if downstream textile demand falls short of expectations, it will affect the pace of polyester profit recovery.
Overall, Hengyi's 23-fold net profit growth in the first half is not an accidental cyclical pulse, but a concentrated release of years of globalized布局, deep industrial chain cultivation, and technological R&D accumulation. In the short term, industry upswing combined with capacity release provides strong certainty for high performance; in the long term, with the sequential completion of three major projects, the company's growth attributes will continue to strengthen.