The polyester industry is undergoing a dramatic profit recovery. Following Hengyi Petrochemical's forecast of a staggering 23-fold increase in H1 net profit, Dongfang Shenghong announced on July 5 that its net profit for the first half of 2026 is expected to reach RMB 4.2 to 5 billion, an increase of 987% to 1195% year-on-year. In Q2 alone, net profit ranged from RMB 2.768 billion to 3.568 billion, surging 93% to 149% quarter-on-quarter and an astonishing 60 to 78 times year-on-year.
The Logic Behind the Profit Surge
This profit feast is not an isolated case. Hengyi's earlier earnings forecast had already sparked market discussion, but Shenghong's explosive growth further confirms a fundamental shift in industry logic. Both companies share two core drivers.
First, the geopolitical conflict-induced crude oil price windfall. The US-Iran conflict escalated in early 2026, disrupting shipping in the Strait of Hormuz. Brent crude surged from $61/barrel at the start of the year to $118/barrel in March, averaging $99/barrel in Q2. Chinese refiners, with diversified crude import channels, suffered less impact than their Japanese and Korean peers, becoming beneficiaries of the price volatility. Shenghong, as an integrated PX-PTA-polyester filament leader with 2.8 million tons/year of PX and 6.3 million tons/year of PTA capacity, directly captured profit elasticity from expanding feedstock price differentials.
Second, the industry's 'anti-involution' push improved supply-demand dynamics. In the past two years, the PX-PTA-polyester filament chain was mired in overcapacity, with PTA losing up to RMB 200/ton. But 2026 saw a reversal: no new PTA capacity was added, while outdated capacity at home and abroad accelerated its exit, ceding market share to leaders. Research notes indicate that the current expansion cycle is nearing its end, and with continued policy support for 'anti-involution', supply-demand dynamics are expected to further improve.
Impact on the Supply Chain
Shenghong's earnings forecast sends a strong signal: profit distribution in the polyester industry is concentrating on integrated leaders. With total aromatics chain capacity exceeding 10 million tons, Shenghong's full-chain vertical integration model maximizes profit capture when feedstock spreads widen.
For downstream weaving and apparel companies, this means raw material cost pressures may intensify. When polyester leaders repair profits, product prices often rise accordingly. Data shows that polyester filament prices have already increased significantly with crude oil in Q2, raising procurement costs downstream. However, the exit of outdated capacity also reduces low-price competition, helping stabilize market expectations.
How Long Will the Boom Last?
Despite the encouraging performance, the industry must remain vigilant. International oil prices have already corrected as geopolitical tensions eased. If crude continues to decline in Q3, the price spread benefits for polyester products may narrow. Additionally, whether end-user demand can support high raw material prices is a key variable.
However, Shenghong's announcement of 'smooth and stable operation of the integrated refining and chemical project' indicates efficient production. More importantly, the capacity clearance effect from 'anti-involution' is just beginning to show. Even if oil prices fall, the industry's profit center is likely to remain higher than in the past two years.