The polyester industry chain is experiencing a rare profit storm. Following Hengyi Petrochemical's H1 net profit forecast surging over 23 times, Eastern Shenghong announced on July 5 that it expects net profit attributable to shareholders for H1 2026 to reach 4.2 to 5.0 billion yuan, a year-on-year increase of 987% to 1194%. In Q2 alone, Shenghong's net profit is expected to increase by 93% to 149% quarter-on-quarter, and 60 to 78 times year-on-year. The performance forecasts of these two leaders mark that the polyester industry has completely shifted from the 'involutionary losses' of the past two years to a 'money-printing machine' mode.
The Dual Engine Behind the Profit Explosion
Shenghong explained in its announcement that the surge in performance is mainly due to improved supply and demand in the petrochemical industry, rising crude oil prices expanding product spreads, and the stable operation and smooth production and sales of its integrated refining and chemical projects. Behind this statement are two clear driving lines.
The first line is the oil price dividend brought by geopolitical conflicts. In early 2026, the US-Iran conflict escalated sharply, blocking shipping through the Strait of Hormuz. Brent crude oil prices soared from $61/barrel at the beginning of the year to $118/barrel in March, with the Q2 oil price center stabilizing around $99/barrel. Due to China's diversified crude oil import channels, the impact of the geopolitical blockade was far less than that on countries with single procurement sources like Japan and South Korea, making domestic refining companies net beneficiaries of oil price volatility. Shenghong has a PX capacity of 2.8 million tons/year and a PTA capacity of 6.3 million tons/year, with a total aromatic chain capacity exceeding 10 million tons. In an upward oil price cycle, the profit elasticity from inventory appreciation and product spread expansion is extremely significant.
The second line is the reshaping of the industry pattern driven by anti-involution policies. Over the past two years, the PX-PTA-polyester filament yarn chain has been mired in overcapacity and price wars, with PTA losing up to 200 yuan per ton. However, in 2026, there is almost no new PTA capacity added. Instead, backward capacity at home and abroad is accelerating its exit, ceding market share to integrated leaders. Institutional research reports indicate that the current round of industry expansion is nearing its end, and the 'anti-involution' policy continues to advance, which is expected to further improve the supply-demand pattern. This means that even if oil prices retreat later, the industry's profit center is expected to remain at a much higher level than in the past two years.
Chain Reaction: Full-Chain Effects from Refining to Weaving
The profit explosion of polyester leaders is not an isolated event. From upstream PX and benzene, to midstream PTA and polyester filament, to downstream weaving and dyeing, profit redistribution is unfolding at every node.
For the upstream refining link, integrated companies like Shenghong and Hengyi can convert cost pressures from rising oil prices into spread gains through their vertical integration of 'refining-PX-PTA-polyester'. Shenghong's PX capacity ranks among the top domestically, and its supporting products like benzene, styrene, and phenol have a total capacity exceeding 10 million tons. This scale advantage translates into excess profits during an industry upcycle.
For the midstream polyester link, PTA prices rose sharply in Q2 following oil prices. Under the anti-involution backdrop, the industry's self-discipline in production cuts took effect, allowing polyester filament prices to rise in sync with costs, significantly repairing per-ton profits. According to industry public data, the average processing profits for mainstream polyester filament products POY, FDY, and DTY all returned to positive territory in Q2, with some varieties reaching 300 to 500 yuan per ton.
For the downstream weaving link, the situation is more complex. Price transmission for grey fabrics and finished textiles has a lag, forcing weaving mills to absorb some of the raw material price increases. However, at the same time, overseas orders showed signs of recovery in H1 2026, especially rigid demand procurement from Southeast Asian and South Asian markets, providing demand support for the weaving end. Operating rates in weaving clusters like Shengze and Keqiao remained at 70% to 80% in Q2, without large-scale shutdowns due to raw material price increases.
Industry Outlook: How Long Will the Profit Dividend Last?
The current profit explosion in the polyester industry is essentially a 'supply contraction + cost push' double whammy. But the key question for investors and practitioners is: how long can this dividend last?
From the supply side, the expansion cycle for PTA and polyester filament is essentially over. From 2025 to 2026, there will be few new PTA capacity additions domestically, while overseas old plants (especially in Japan, South Korea, and Taiwan) are accelerating their exit. This trend means that from 2026 to 2027, the supply-demand pattern for PTA will continue to improve, with industry operating rates expected to remain above 80%.
From the demand side, domestic textile and apparel demand maintained steady growth in H1 2026, and export data was also impressive. China Customs data shows that from January to May 2026, cumulative textile and apparel exports increased by about 5% year-on-year, with exports of polyester filament and fabrics growing by over 8%. Restocking demand from European and American markets, coupled with consumption upgrades in emerging markets, provides a relatively solid demand base for polyester products.
However, risk factors cannot be ignored. International oil prices have already retreated after the easing of geopolitical conflicts, with Brent crude falling from a high of $118/barrel to around $90/barrel. If oil prices continue to decline, product spreads may narrow. Additionally, whether the anti-involution policy can be sustained and industry self-discipline maintained are key variables determining the longevity of the profit dividend.