The profit landscape of the polyester chain is undergoing a dramatic restructuring. Following Hengyi Petrochemical's forecast of a 23-fold year-on-year increase in H1 net profit, Eastern Shenghong released its performance forecast on July 5, confirming the trend: net profit attributable to shareholders for H1 2026 is expected to reach RMB 4.2-5.0 billion, a year-on-year increase of 987% to 1194%.
The Dual Logic Behind the Surge
Shenghong's performance surge is not an isolated case. From Q1 data, the company's single-quarter net profit reached RMB 1.432 billion, while Q2's sequential growth is estimated at 93% to 149%, meaning Q2 net profit alone could nearly double Q1's figure. Such strong sequential growth is rare in the chemical industry.
Two core factors underpin this growth. First, the geopolitical oil price volatility dividend. The US-Iran conflict in early 2026 disrupted Hormuz Strait shipping, pushing Brent crude from $61/barrel at the start of the year to $118/barrel in March. Though it eased in Q2, it stabilized around $99/barrel. Chinese refiners, with diversified crude import channels, suffered less impact than Japan and South Korea, becoming beneficiaries of the price surge.
Second, the 'anti-involution' policy driving capacity clearance. Over the past two years, the PX-PTA-polyester filament yarn chain was mired in price wars, with PTA once losing RMB 200 per ton. In 2026, no new PTA capacity was added, while outdated capacity at home and abroad exited faster, ceding market share to integrated leaders. Institutional research indicates the expansion cycle is nearing its end, and supply-demand dynamics are improving.
Industrial Belt and Downstream Transmission Effects
Shenghong's capacity is mainly in the Lianyungang petrochemical base in Jiangsu, with 2.8 million tons/year of PX, 6.3 million tons/year of PTA, and a total aromatics chain capacity exceeding 10 million tons. This full-chain vertical integration amplifies profit elasticity when feedstock spreads widen.
For downstream textile industrial belts—such as Keqiao in Shaoxing, Shengze in Wujiang, and Nantong home textiles—upstream raw material cost fluctuations directly impact fabric mills' procurement costs. Currently, polyester filament yarn prices have risen with PTA, but the recovery pace of end garment orders remains uncertain. If raw material prices stay high, fabric mills' margins may be squeezed, especially for small and medium-sized weaving factories lacking bargaining power.
Industry Trends and Procurement Strategy Adjustments
Notably, while international oil prices have retreated after geopolitical tensions eased, the structural benefits from capacity clearance are just beginning. This suggests the profit improvement in the polyester chain is not a short-term spike but may persist into H2 and even next year. For textile enterprises, this means:
- Procurement can no longer rely on the 'buy as needed, bargain for inventory' strategy of the past two years; long-term contracts and price-locking tools need more attention.
- Integrated leaders' bargaining power is strengthening, while smaller polyester factories' survival space will narrow further, increasing supply chain concentration.
- Polyester filament yarn and other chemical fiber raw material prices will fluctuate more frequently, requiring fabric mills to strengthen inventory management and hedging awareness.