In the first half of 2026, the polyester chain staged a profit miracle. On July 5, Eastern Shenghong announced a forecast of 4.2 to 5 billion yuan in net profit for H1, up 987% to 1195% year-on-year. Earlier, Hengyi's forecast was even more staggering, with net profit surging over 23 times. These results have forced the market to reevaluate an industry once plagued by 'involutionary losses.'
Dual Engines of Profit Surge
This profit spike is not driven by a single factor. First is the oil price dividend from geopolitical tensions. The US-Iran conflict escalated in early 2026, disrupting Hormuz Strait shipping, sending Brent crude from $61/barrel to $118/barrel in March, stabilizing at $99/barrel in Q2. Chinese refiners, with diversified crude import channels, became beneficiaries amid oil price volatility, while countries like Japan and South Korea with single-source imports faced greater shocks.
Second is the effectiveness of industry 'anti-involution' policies. Over the past two years, the PX-PTA-polyester filament chain suffered from overcapacity-driven price wars, with PTA losses reaching 200 yuan per ton. But in 2026, the situation reversed: no new PTA capacity was added, and outdated capacity at home and abroad accelerated exit, ceding market share to integrated leaders. Institutional research indicates that this expansion cycle is nearing its end, and supply-demand dynamics are improving.
Capacity Moat of Leaders
Eastern Shenghong's profit explosion is directly linked to its massive capacity layout. The company owns 2.8 million tons/year of PX, 6.3 million tons/year of PTA, and over 1 million tons/year of benzene, with total aromatics chain capacity exceeding 10 million tons. This vertically integrated model allows it to capture spread gains during oil price upticks. Q2 net profit grew 93%-149% quarter-on-quarter and 60-78 times year-on-year, reflecting scale and cost advantages.
Hengyi's surge also involved special factors from its overseas Brunei facility, which acted as a strategic buffer during the geopolitical blockade. But Shenghong's performance is more telling: even without overseas special dividends, domestic integrated leaders can achieve over 10-fold growth. This signals a fundamental shift in industry logic.
Transmission and Impact
The polyester profit surge has ripple effects across the chain. For upstream crude buyers, high oil prices mean sustained cost pressure, but integrated leaders expand margins by passing costs through chemical spreads. For downstream weaving and apparel firms, raw material costs like polyester filament may rise, pressuring procurement budgets.
More notably, capacity consolidation from phase-outs enhances pricing power for leaders, potentially putting downstream buyers at a disadvantage in negotiations. However, long-term industry health improves supply chain stability and reduces price volatility.