Hengyi Petrochemical has delivered a financial report that commands the attention of the entire chemical fiber industry: a net profit attributable to shareholders of 5.5 to 6 billion RMB for the first half of the year, a year-on-year surge of 2,326% to 2,547%. This figure signals that a company rooted in PTA and polyester is now eyeing the profitability levels of international energy giants.
The Core Engine of Profit Surge
The epicenter of this profit explosion is not in China but in Brunei. The Hengyi Brunei refining project is the only overseas capacity among China's private mega-refineries, and its unique locational advantages have been fully unleashed in the first half of this year. The supply-demand dynamics for refined oil products in Southeast Asia remain persistently tight, cracking spreads have widened significantly, and the Brunei refinery benefits from local tax incentives, market-based pricing, and low shipping and insurance costs, achieving full production and full sales.
Looking at the data chain: In Q1, Hengyi had already achieved a net profit of 1.995 billion RMB, a year-on-year surge of 3,773%; Q2 alone saw profits of 3.5 to 4 billion RMB, a sequential increase of 76% to 101%. This accelerating quarterly trend suggests that the Southeast Asian refining dividend is not a one-time pulse but a sustained cyclical dividend. For domestic peers, this constitutes a structural advantage—when domestic refining capacity is oversupplied and margins are thin, overseas deployment becomes a key lever to navigate cycles.
Three Major Projects Reshaping the Industry Landscape
Amidst high profits, Hengyi is playing a much larger game. The Brunei Phase II project has been fully launched, with a designed capacity of 12 million tons per year, expected to be completed by the end of 2028. Upon completion, the total capacity of the Brunei refinery will reach 20 million tons per year. This is the only incremental capacity overseas among private mega-refineries in recent years, and its strategic scarcity is self-evident.
Even more noteworthy is the Xinjiang coal-to-ethylene glycol project, planned for an annual output of 2.4 million tons of high-quality fiber-grade coal-to-ethylene glycol, expected to be operational by the first half of 2028. This layout signals Hengyi's attempt to break free from reliance on a single crude oil route, expanding its raw material sources to coal. The Jingzhou recycling new materials project in Hubei targets waste textiles—with an annual capacity of 300,000 tons, it will convert discarded fabric back into high-value chemical raw materials, with a construction period of only 18 months.
Together, these three projects paint a picture of a raw material landscape supported by 'oil, coal, and textiles.' For downstream buyers, this means Hengyi's future supply stability for polyester raw materials will significantly improve, reducing the risk of price volatility.
Industry Transmission and Procurement Signals
Hengyi's profit surge sends clear signals up and down the textile supply chain. On the PTA and polyester front, the industry's 'anti-involution' is making tangible progress, and the profit recovery from capacity structure optimization is already visible. This means the era of polyester plants 'making noise but not money' over the past two years is ending, and upstream raw material prices are likely to gain stronger support.
For fabric and garment buyers, a key variable to watch is: when upstream refining profits are high, the pricing center for PX and PTA may shift upward. For procurement contracts in the second half of 2026, it may be necessary to reassess the proportion of raw material costs. Meanwhile, new capacities like Hengyi's Brunei Phase II are expected to come online around 2028, which could again alter the supply landscape for PX and polyester raw materials, so medium- to long-term procurement strategies should build in flexibility.
The Risk List Amid High Prosperity
The flip side of a profit surge is heightened risk exposure. Crude oil prices are the biggest variable—if international oil prices fall sharply, refiners face dual pressure from inventory write-downs and narrowing cracking spreads. The Brunei Phase II and coal-to-ethylene glycol projects involve massive investments and long construction periods, carrying risks of delayed commissioning and financial strain. Additionally, core refining capacity is concentrated in a single region (Brunei), so host country policies and geopolitical changes could impact cost advantages.
Downstream textile demand is another hidden concern. If end-consumption falls short of expectations, the pace of profit recovery in the polyester segment could be disrupted, affecting profit distribution across the entire chain.