Polyester Giants' H1 Earnings Surge: Refining Integration Dividends and Anti-Involution Cycle Converge

The polyester industry is experiencing a dramatic profit surge. On July 5, Eastern Shenghong released its H1 2026 earnings forecast, projecting net profit attributable to shareholders between 4.2 billion and 5.0 billion yuan, a year-on-year increase of 987% to 1195%. Just days earlier, Hengyi Petrochemical had forecast a net profit surge of over 23 times for the same period. These two flagship companies' financial data have thrust the polyester chain's prosperity into the spotlight.

The Dual Engines Behind the Profit Explosion

Eastern Shenghong's announcement attributes the surge to three core factors: improved supply-demand dynamics in the petrochemical industry, expanded product spreads driven by rising crude oil prices, and the stable operation of its integrated refining and chemical project. This explanation points to two main drivers behind the current profit explosion in the polyester sector.

The first driver is the geopolitical oil dividend. In early 2026, the U.S.-Iran conflict escalated abruptly, disrupting shipping through the Strait of Hormuz. Brent crude surged from $61/barrel at the start of the year to $118/barrel in March, with the Q2 price center stabilizing around $99/barrel. China's diversified crude import channels allowed domestic refiners to benefit from this volatility, while countries like Japan and South Korea, with more concentrated procurement sources, bore greater impacts.

The second driver is structural industry adjustment. The PX-PTA-polyester filament yarn chain suffered from 'involutionary losses' over the past two years—PTA once lost 200 yuan per ton at its lowest. But 2026 marks a turning point: no new PTA capacity has been added, while outdated capacity at home and abroad is accelerating its exit. Institutional research indicates that the current expansion cycle is nearing its end, and 'anti-involution' policies are steadily improving the supply-demand balance.

How Deep Is the Moat for Integrated Leaders?

Eastern Shenghong's capacity layout clearly showcases its 'integrated moat.' The company boasts annual capacities of 2.8 million tons of PX, 6.3 million tons of PTA, and over 1 million tons of benzene, along with multiple chemical product lines such as styrene, phenol, acetone, and propylene oxide. Its total aromatics chain capacity exceeds 10 million tons. This vertically integrated structure allows the company to maximize profits through chemical product spreads during crude price fluctuations, rather than relying on any single segment.

Hengyi's growth logic carries a unique overseas variable. Its Brunei refining project, during the Strait of Hormuz blockade, became a scarce stable supply source, amplified by premium pricing in Southeast Asian markets. However, even excluding this special factor, Eastern Shenghong's performance demonstrates that domestic integrated refiners have proven their profitability during oil upcycles.

Sustainability of the Upswing

For downstream buyers and traders in the textile chain, what does the polyester giants' profit surge mean?

In the short term, oil prices have retreated as geopolitical tensions ease, but the structural benefits from 'anti-involution' are just beginning to materialize. As outdated capacity exits, market share concentrates among leaders, suggesting a more stable supply pattern for PTA and polyester filament yarn, with narrower price swings compared to the chaotic price wars of 2024-2025.

In the medium term, profit distribution along the PX-PTA chain is shifting. Over the past two years, losses in upstream PX and PTA squeezed downstream polyester and weaving segments. As integrated leaders restore profitability, they may pass some profits downstream to secure customer relationships, but they could also leverage cost advantages to squeeze smaller competitors.

For textile mills and fabric buyers, the key question is whether the polyester raw material price center has systematically shifted upward. If crude oil maintains a range of $80-100/barrel and no new PTA supply emerges, cost support for polyester filament yarn will be more solid than in the past two years. This implies both rigid cost increases and significantly lower risk of price wars—stability, even at a higher level, is more conducive to business planning than low-price volatility.

Practical Recommendations

For Buyers - Closely monitor monthly average operating rates and inventory levels of PTA and PX. If industry operating rates consistently fall below 80%, raw material prices tend to rise, so lock in long-term contracts moderately in advance. - Track maintenance schedules and new capacity timelines of leading polyester companies, especially integrated leaders like Shenghong, Hengyi, Hengli, and Rongsheng, as their pricing power is increasing. - In a volatile price environment, sign annual agreements with suppliers that include price adjustment mechanisms to avoid order losses from raw material spikes.

For Foreign Trade Enterprises - Overseas clients' pricing logic for polyester raw materials is changing. The cost advantages of China's integrated refiners will translate into export competitiveness—quotations for polyester filament yarn, fabrics, and other end products can more confidently reflect cost support. - Pay attention to competitive dynamics in Southeast Asia. Hengyi's Brunei project highlighted regional supply advantages during the Strait of Hormuz crisis; other Chinese polyester leaders are also accelerating overseas capacity deployment, reshaping global polyester trade flows. - In quotations and contracts, consider adding floating pricing clauses linked to crude oil prices to hedge against geopolitical cost uncertainties.