When one polyester giant reports a net profit surge of over 10 times, and another exceeds 23 times, it signals a cyclical turnaround for the entire polyester chain in the first half of 2026.
The Data: A Sector-Wide Surge
On July 5, Eastern Shenghong released its H1 2026 earnings forecast, projecting net profit attributable to shareholders between RMB 4.2 billion and RMB 5.0 billion, a year-on-year increase of 987% to 1195%. Sequentially, Q2 net profit jumped 93%-149% from Q1, and soared 60-78 times year-on-year.
Earlier in late June, Hengyi Petrochemical had already stunned the market with a forecast of 2326%-2547% net profit growth. Two giants delivering such explosive results is no coincidence.
Shenghong's production capacity includes 2.8 million tons/year of PX, 6.3 million tons/year of PTA, and over 10 million tons of total aromatics chain capacity. The company attributed the profit surge to improved supply-demand dynamics in petrochemicals, wider product spreads driven by rising crude oil prices, and stable operations of its integrated refining and chemical complex.
Dual Drivers: Oil Price Windfall and Anti-Internal Competition
The polyester industry's shift from loss-making overcapacity to a profit machine stems from two forces.
First, geopolitical tensions drove oil price volatility. The US-Iran conflict in early 2026 disrupted Hormuz Strait shipping, pushing Brent crude from $61/barrel in January to $118/barrel in March, stabilizing around $99/barrel in Q2. China's diversified crude import channels insulated it from supply shocks that hit Japan and South Korea harder, making domestic refiners beneficiaries.
Second, the industry's "anti-internal competition" policy took effect. The PX-PTA-polyester filament chain had suffered from severe overcapacity, with PTA losses reaching RMB 200/ton. But in 2026, no new PTA capacity came online, while outdated capacity at home and abroad accelerated exit, ceding market share to integrated leaders. Research notes indicate the expansion cycle is ending, and supply-demand balance is improving.
Even as oil prices retreat after geopolitical de-escalation, the structural benefits from capacity rationalization are just beginning to materialize.
Industry Impact: The Integrated Leader Premium
Two clear logics emerge from Shenghong and Hengyi's performance.
First, companies with full-chain integration capture maximum profit leverage in upcycles. Shenghong's self-sufficiency in key intermediates like PX, PTA, and benzene allows it to lock in margins when spreads widen.
Second, the PTA capacity hiatus offers a rare window. After years of 10%+ annual capacity growth, zero new capacity in 2026 plus old plant shutdowns should lift PTA processing margins from loss territory. This also benefits downstream polyester filament and bottle-grade segments.
However, sustainability depends on Q3 demand. Textile end-orders are stable, but overseas uncertainties remain, including US-EU retail destocking and currency fluctuations.