Behind the Profit Surge of Chemical Fiber Giants: Supply Constraints Reshaping the Industry Cycle

The chemical fiber industry is undergoing a supply-driven profit recovery. Xinfengming’s latest earnings forecast projects a net profit attributable to parent company of RMB 1.38-1.5 billion for H1 2026, up 94.59%-111.51% year-on-year. Core net profit is expected to reach RMB 1.45-1.58 billion, an increase of 119.61%-139.30%.

Supply Deceleration as Key Variable

In past cycles, profit surges in chemical fibers were often driven by robust demand. This time is different. Xinfengming explicitly attributes the performance to “orderly slowdown of new capacity additions and improved supply-demand balance.” This indicates that rather than an explosion in end-market demand, it is the controlled pace of capacity release that has significantly boosted pricing power for existing capacity.

In H1 2025, Xinfengming’s net profit was RMB 709 million—a solid base. The projected doubling in H1 2026 suggests that product spreads have widened far beyond market expectations. Industry data shows that gross margins for major products like polyester filament have been steadily recovering over the past 12 months, closely aligned with the slowdown in new capacity commissioning.

What Cycle Dulling Means for Downstream

For fabric mills, garment buyers, and foreign trade firms, the moderation of chemical fiber price volatility is a structural shift worth noting. In previous years, sharp price swings forced downstream players to constantly manage inventory risks—rushing to buy during price hikes and destocking during downturns. If supply-side discipline is sustained, the range of raw material price fluctuations will narrow significantly.

For buyers, this allows for a more composed approach to medium- and long-term procurement planning, rather than frequent market chasing. Meanwhile, improved profits at leading firms will likely boost R&D investment and product upgrades, ensuring a more stable supply of differentiated fibers and functional fabrics.

Transmission Effects in Regional Industrial Clusters

As a leading chemical fiber producer based in Tongxiang, Xinfengming’s performance directly reflects the current operating conditions of the Jiangsu-Zhejiang chemical fiber industrial belt. Plant utilization rates in Tongxiang, Shengze, and Xiaoshan have remained high over the past six months, consistent with the profit recovery trend. However, profit improvement is not universal—smaller firms lacking scale advantages and product diversity face greater competitive pressure in a supply-constrained environment.

Practical Recommendations

For Buyers - Reassess price terms in annual procurement agreements. The current spread expansion cycle may be in its middle phase; locking in medium-to-long-term contracts is more prudent than spot purchases. - Monitor the launch pace of new differentiated products from leading firms. The profit recovery window is often the most active period for product introductions.

For Foreign Trade Companies - Narrowing raw material cost volatility supports more stable export pricing. It is advisable to adopt a floating base price plus fixed processing fee model for long-term orders with overseas clients. - Watch demand shifts for chemical fiber products in Southeast Asia and South Asia. Improved supply-side conditions may temporarily enhance the price competitiveness of Chinese products.