Polyester Giants Surge: Shenghong's H1 Profit Soars Over 10x, Signaling Industry Reversal

The polyester industry is experiencing a dramatic reversal from the depths of loss-making competition to explosive profitability. Following Hengyi Petrochemical's forecast of a 2,326%-2,547% surge in H1 net profit, another giant, Eastern Shenghong, released equally stunning guidance on July 5: H1 2026 net profit attributable to shareholders is expected to reach RMB 4.2-5.0 billion, a year-on-year increase of 987%-1,194%. This means Shenghong earned in six months what it took years to generate during the downturn.

Behind the Profit Explosion: Oil and Anti-Involution

Breaking down Shenghong's profit structure, Q1 net profit was RMB 1.432 billion, while Q2 is projected to jump to RMB 2.768-3.568 billion, a sequential increase of 93%-149% and an astonishing 60-78 times year-on-year. This explosive growth is not an isolated case. Hengyi's earlier forecast of a 2,326%-2,547% increase had already shocked the market, but that was partly attributed to its unique overseas Brunei facility and the Strait of Hormuz blockade. Shenghong's comprehensive surge reveals a deeper industry-wide shift.

One key driver is geopolitical conflict pushing up oil prices. The US-Iran conflict escalated in early 2026, disrupting Strait of Hormuz shipping. Brent crude surged from $61/bbl at the start of the year to $118/bbl in March, stabilizing around $99/bbl in Q2. China, with diversified crude import channels, suffered less impact than Japan and South Korea, making domestic refiners beneficiaries of the oil price rally as product spreads widened.

Another critical driver is the industry's 'anti-involution' policy leading to supply-side consolidation. The PX-PTA-polyester filament yarn chain had been mired in price wars, with PTA losing up to RMB 200 per ton. However, in 2026, almost no new PTA capacity was added, while outdated capacity both domestically and overseas accelerated its exit, ceding market share to integrated leaders. Institutional research indicates that the current expansion cycle is nearing its end, and supply-demand dynamics are improving. Shenghong, with its PX capacity of 2.8 million tons, PTA capacity of 6.3 million tons, and total aromatics chain capacity exceeding 10 million tons, benefits doubly from both spread expansion and market share gains.

Industry Transmission: From Upstream Refining to Downstream Weaving

The transmission of profits from upstream to downstream deserves close attention. The windfall profits of leaders like Shenghong and Hengyi are essentially the result of widened spreads along the crude-naphtha-PX-PTA chain. For downstream weaving enterprises, this means significantly rising raw material costs. In H1 2026, polyester filament yarn prices rose in tandem with PTA and crude, while grey fabric prices, though also increasing, typically lagged in both timing and magnitude.

Feedback from major weaving clusters like Shengze and Keqiao shows declining grey fabric inventories, but terminal orders have not seen a synchronous explosion. This suggests the current price hike is more cost-push than demand-pull. If oil prices correct without a substantial recovery in end-user demand, downstream firms could face the dual pressure of falling raw material prices and insufficient orders.

Practical Recommendations

For Buyers - With polyester raw materials at high levels, adopt a phased procurement strategy to avoid large one-time stockpiling, hedging against potential oil price corrections. - Monitor PTA and polyester filament yarn inventory changes; if inventories begin to accumulate, consider delaying purchases when price softening signals appear. - Sign long-term supply agreements with integrated leaders to lock in part of the supply, leveraging their cost advantages to buffer market volatility.

For Exporters - Overseas customers have limited tolerance for high raw material costs; include a 'raw material price fluctuation clause' in quotations to transfer some cost volatility to buyers. - Monitor the production status of competitors in Southeast Asia and South Asia; if they face supply disruptions due to shortages or high prices, seize the opportunity to gain market share. - Use the window of RMB exchange rate fluctuations to conduct appropriate forward settlement operations to lock in export profits.