A net profit range of RMB 5.5 to 6.0 billion, corresponding to a year-on-year surge of 2,326% to 2,546%—Hengyi Petrochemical's H1 2026 performance forecast has forced the entire chemical fiber industry to reassess the value of overseas refinery layouts. Against a backdrop where traditional segments like PTA and polyester are still digesting overcapacity, this private-sector giant has demonstrated that the locational choice of refining capacity is becoming a new variable in profit distribution along the chemical fiber value chain.
The Brunei Refinery: Why the Profit Engine Keeps Running
Hengyi's profit explosion is not a one-off event. In Q1, net profit reached RMB 1.995 billion, up 3,773% year-on-year; Q2 grew another 76% to 101% sequentially, with a single-quarter profit range of RMB 3.5 to 4.0 billion. The core asset supporting this trajectory is the Brunei refinery in Southeast Asia.
Southeast Asian refined product markets have long faced tight supply-demand balances, contrasting sharply with China's overcapacity. The Brunei refinery enjoys tax incentives, market-based pricing, and low freight and insurance costs. Combined with high margins for PX, benzene, and other chemicals, it has achieved full-capacity operation and full sales. For buyers, this means Hengyi enjoys stable cost advantages in upstream raw materials like PX, giving its polyester products lasting price competitiveness.
From an industry perspective, Hengyi is the only Chinese chemical fiber company with an overseas refinery. This scarcity amplifies its profit elasticity as anti-intra-industry competition policies drive PTA capacity consolidation. While peers worry about PTA processing fee volatility, Hengyi has achieved cross-cycle profit stability through its refining operations.
Three Major Projects: From Refining-Chemical Fiber to Integrated Oil-Coal-Textile
Three strategic projects under construction will fundamentally reshape Hengyi's industrial profile.
Brunei Phase II, with a design capacity of 12 million tons per year, is slated for completion by end-2028, bringing total Brunei capacity to 20 million tons per year. This is the only overseas capacity addition among private mega-refineries in recent years, making it strategically scarce. The Xinjiang coal-to-ethylene glycol project will produce 2.4 million tons per year of high-quality fiber-grade EG, expected to come online in H1 2028, breaking the sole dependence on oil-based EG. The Jingzhou circular new materials project in Hubei will use waste textiles as feedstock to produce 300,000 tons per year of recycled materials, with an 18-month construction timeline, aligning with China's dual-carbon strategy.
Once these projects are operational, Hengyi will achieve a three-pronged raw material structure: oil, coal, and textile waste. For downstream textile buyers, this means significantly enhanced supply stability—no longer fully hostage to crude oil price swings, and the pricing logic for EG and polyester raw materials may fundamentally change.
Can the Boom Last? Three Variables to Watch
A key question is whether Hengyi's high profit growth is sustainable. In the short term, the tight supply-demand balance for Southeast Asian refined products is unlikely to reverse within the year, supporting strong Brunei refinery profits for the full year. PTA and polyester industry capacity structures have been materially optimized under anti-intra-industry competition policies, making margin recovery sustainable. The nylon project's ramp-up will also add incremental contributions.
However, risks cannot be ignored.
- Sharp crude oil price declines could trigger inventory write-downs and narrow crack spreads, directly hitting refining profits.
- Project execution risks: Phase II and the coal-to-EG project involve large investments and long timelines, with potential delays and funding pressure.
- Geopolitical and policy risks: Concentrating core refining capacity in Brunei exposes the company to host-country policy changes or regional instability.
- Downstream textile demand: If end-consumption disappoints, polyester margin recovery could slow.