The first half of 2026 is reshaping expectations for the polyester industry with a series of explosive earnings forecasts. Following Hengyi's announcement of a net profit surge of over 23 times, Shenghong reported on July 5 that it expects net profit attributable to shareholders to reach 4.2 billion to 5 billion yuan, a year-on-year increase of 987% to 1194%. On a quarterly basis, its Q2 net profit rose 93% to 149% sequentially and 60 to 78 times year-on-year.
Dual Drivers Behind the Earnings
Shenghong attributed its performance to three factors: improved supply-demand dynamics in the petrochemical industry, higher crude oil prices widening product spreads, and stable operations of its integrated refining and chemical projects. However, the deeper logic lies in the convergence of geopolitical shocks and industrial cycle cleanup.
In early 2026, escalating US-Iran conflict disrupted shipping through the Strait of Hormuz, sending Brent crude from $61/barrel in January to $118/barrel in March, with Q2 averaging $99/barrel. Chinese refiners, with diversified crude import channels, suffered less impact than Japan and South Korea, which rely on single sources, and instead benefited from higher oil prices. Shenghong's 2.8 million tons/year PX capacity, 6.3 million tons/year PTA capacity, and over 10 million tons/year total aromatics chain capacity give it maximum leverage when spreads widen.
Anti-Involution and Capacity Cleanup: A Longer-Lasting Boost
While oil price spikes are short-term, the industry's anti-involution campaign driving capacity cleanup offers structural support for sustained profitability. Over the past two years, the PX-PTA-polyester filament chain was mired in price wars, with PTA losing 200 yuan per ton at its worst. But in 2026, no new PTA capacity was added, while outdated capacity both domestically and overseas accelerated its exit, ceding market share to integrated leaders.
Institutional research indicates the current expansion cycle is nearing its end, and continued anti-involution policies are expected to further improve the supply-demand balance. Head players like Shenghong and Hengyi, with advantages in scale, low cost, and high chemical yields, are best positioned to benefit from the recovery. This means even if oil prices retreat due to eased geopolitical tensions, the upward shift in industry profit margins can persist.
Supply Chain Implications: From Feedstock to Fabric
The profit surge among polyester giants has direct implications for downstream fabric and apparel sectors. The most immediate impact is rising raw material costs. Higher PX and PTA prices will push up polyester filament prices, which then transmit to grey fabric and finished fabric. For buyers, the window for locking in low prices in the first half is closing.
However, capacity cleanup also reduces supply of low-quality, low-priced products, helping stabilize fabric quality. For brand customers focused on supply chain stability, partnering with integrated leaders can offer more reliable quality and delivery assurance.