A net profit surge of nearly 12 times in half a year for a refining giant is enough to shake any industry. On July 5, Oriental Energy released its H1 2026 forecast, projecting net profit attributable to shareholders of RMB 4.2 to 5 billion, a year-on-year increase of 987% to 1194%. Just a month earlier, Hengyi Petrochemical had forecast a 2326% to 2546% jump. The polyester industry is rapidly exiting its two-year 'involutionary loss' phase and entering a period of rapid profit recovery.
Three Engines Behind the Profit Explosion
This earnings boom is no accident but the result of multiple factors converging. The primary driver is the geopolitical surge in crude oil prices. The US-Iran conflict in early 2026 disrupted Hormuz Strait shipping, pushing Brent crude from $61/barrel in January to $118/barrel in March, with Q2 averaging $99/barrel. Chinese refiners, benefiting from diversified import channels, maintained stable supply, while competitors dependent on single sources faced greater cost pressure.
The second key variable is the 'anti-involution' policy reshaping supply-demand dynamics. The PX-PTA-polyester filament chain was mired in overcapacity, with PTA losing up to RMB 200 per ton at its worst. But 2026 marked a turning point: zero new PTA capacity, accelerated exit of outdated capacity both domestically and internationally, and natural market share expansion for leading firms. Institutional research indicates the current expansion cycle is near its end, with the supply-demand balance shifting upward.
The third factor lies in the scale and integration advantages of leading firms. Oriental Energy operates 2.8 million tons/year of PX capacity and 6.3 million tons/year of PTA, with a total aromatics chain capacity exceeding 10 million tons. In a market of widening spreads, a full-chain layout captures profits at every link. The company's Q2 net profit grew 93% to 149% quarter-on-quarter, and 60 to 78 times year-on-year, a clear demonstration of this leverage effect.
Chain Reaction: From Refining to Textiles
The profit surge of polyester leaders is both a signal and a challenge for downstream textile firms. The signal is a systemic rise in raw material prices—Brent crude averaging $99/barrel in Q2 will directly pass through to intermediate products like PTA and polyester filament. The challenge is that upstream profit recovery often compresses downstream margins.
In textile hubs like Shengze and Keqiao, grey fabric prices have already begun to follow the rise of polyester filament. However, end garment orders have not recovered at the same pace, leaving some weaving mills squeezed between rising raw material costs and difficulty in passing on price increases. Industry data shows that while loom utilization rates have picked up in H1 2026, finished goods inventory cycles continue to lengthen, indicating demand has not yet rebounded strongly.
A key question for sustainability is whether the geopolitical premium will become structural, and whether price increases will reignite new capacity investment. Currently, anti-involution policies remain in place, raising entry barriers and making a near-term capacity rebound unlikely.