The profit recovery in the polyester industry has exceeded market expectations. On July 5, Eastern Shenghong released its H1 2026 performance forecast, expecting net profit attributable to shareholders of listed companies to reach 4.2-5.0 billion yuan, up 987%-1194% year-on-year. On a quarterly basis, its Q2 net profit grew 93%-149% sequentially and surged 60-78 times year-on-year. Following Hengyi Petrochemical's earlier announcement of a 23-fold net profit increase in H1, Shenghong's results confirm that the polyester chain's cyclical turnaround is not an isolated case.
Dual Engines of Boom: Oil Price Pass-Through and Anti-Involution Capacity Phase-Out
Shenghong attributed its performance surge to improved supply-demand dynamics in the petrochemical industry, crude oil price increases widening product spreads, and stable operation of its integrated refining and chemical project. From an industry macro perspective, this results from two forces.
First, crude oil price spikes driven by geopolitical conflicts. In early 2026, deteriorating US-Iran tensions disrupted shipping through the Strait of Hormuz, pushing Brent crude from $61/barrel at the start of the year to a peak of $118/barrel in March, with Q2 oil prices stabilizing around $99/barrel. Chinese refiners, benefiting from diversified crude import channels, suffered less impact than countries like Japan and South Korea with single-source procurement, instead gaining from wider spreads. For PTA and polyester filament yarn producers, higher oil prices directly boosted chemical product prices and profitability.
Second, anti-involution policies accelerating the phase-out of outdated capacity. Over the past two years, the PX-PTA-polyester filament yarn chain was mired in a 'loss-making involution cycle,' with PTA losing up to 200 yuan per ton at its lowest. But in 2026, no new PTA capacity was added, and outdated capacity at home and abroad exited faster, ceding market share to integrated domestic leaders. Institutional research reports indicate that the current round of industry expansion is nearing its end, and the continued push of 'anti-involution' policies is fundamentally improving supply-demand dynamics. Shenghong, with 2.8 million tons/year of PX capacity and 6.3 million tons/year of PTA capacity, and total aromatics chain product capacity exceeding 10 million tons, leverages its large-scale, low-cost, and high-chemical-yield advantages into tangible profits during the recovery.
Transmission Effects on the Textile Supply Chain
The profit explosion of polyester giants implies a rise in upstream raw material cost centers for the textile industry. Polyester filament yarn is a key raw material for fabric production, and its price fluctuations directly impact weaving, dyeing, and garment manufacturing. While oil prices have retreated after geopolitical tensions eased, the benefits of anti-involution and capacity phase-out are just beginning. This suggests that polyester product price support may be more persistent than markets anticipate.
For downstream fabric buyers, the key risk is margin compression from rising raw material costs. When the industry was loss-making in 2025, fabric companies enjoyed low-cost raw material dividends. But now, as upstream profits recover, cost pass-through pressure will gradually emerge. However, stable production and sales at leaders like Shenghong also mean enhanced supply chain stability and reduced disruption risks.