In the first half of 2026, the profit recovery in the polyester industry has far exceeded market expectations. Dongfang Shenghong's performance forecast released on July 5 shows that its net profit attributable to shareholders in H1 is expected to reach RMB 4.2-5.0 billion, a year-on-year increase of 987%-1194%. Earlier, Hengyi Petrochemical disclosed an even more astonishing forecast, with net profit surging over 23 times year-on-year. These consecutive 'explosive' results from two leading companies indicate that the polyester chain has completely turned around from the deep losses of the past two years.
Dual Drivers: Geopolitical Premium and Cost Advantage
One core driver of this profit surge is the rise in international oil prices. The escalation of the US-Iran conflict in early 2026 disrupted shipping through the Strait of Hormuz, pushing Brent crude from $61/barrel at the start of the year to a peak of $118/barrel in March, with the Q2 average still around $99/barrel. For integrated refining-chemical enterprises using crude oil as raw material, rising oil prices directly widen product spreads.
The key is that Chinese refining companies have diversified crude oil import channels, suffering far less impact from the Hormuz blockade than countries like Japan and South Korea, which rely on single sources. Dongfang Shenghong boasts an annual PX capacity of 2.8 million tons, PTA capacity of 6.3 million tons, and a total aromatics chain capacity exceeding 10 million tons. This large-scale integrated layout allows it to secure raw materials stably and expand profit margins on finished products during oil price volatility.
Anti-Internal Competition: From Losing RMB 200/Ton to Soaring Profits
The fundamental improvement in the supply-demand landscape of the chain is another major variable. Over the past two years, the PX-PTA-polyester filament yarn chain was mired in 'loss-making internal competition,' with PTA sometimes losing RMB 200 per ton. Capacity overcapacity led to vicious price wars that plagued the entire industry. However, 2026 saw a reversal.
Industry public data shows no new PTA capacity was added in 2026, while the exit of outdated capacity at home and abroad accelerated. Institutional research reports indicate that this expansion cycle is nearing its end, with anti-internal competition policies progressing and the supply-demand balance shifting from surplus to equilibrium. In this context, leading companies with scale advantages and low costs are the first to benefit—Dongfang Shenghong's Q2 net profit grew 93%-149% quarter-on-quarter, with a year-on-year increase of 60-78 times, fully demonstrating profit elasticity after capacity clearance.
The Definite Advantage of Integrated Leaders
This cyclical recovery is not evenly distributed. The smooth operation and efficient production-sales of integrated refining-chemical projects directly determine whether companies can seize the opportunity. Dongfang Shenghong explicitly stated in its announcement that its performance growth was 'attributed to the stable operation of the integrated refining-chemical project and smooth production and sales.' This means that companies with a complete chain from crude oil to chemical fiber end-products can lock in profits through internal synergies during raw material price fluctuations and product spread expansion.
In contrast, small and medium-sized polyester plants relying on external raw material purchases face greater cost pass-through pressure during volatile oil prices. Industry consolidation is accelerating: on one hand, leading companies expand market share through scale effects and vertical integration; on the other, outdated capacity is forced to exit.
Oil Price Correction Does Not Alter Long-Term Trend
Although international oil prices corrected at the end of Q2 due to eased geopolitical tensions, the profit logic of the polyester industry has shifted from 'oil price-driven' to 'supply-demand-driven.' The capacity clearance effect from anti-internal competition policies is just beginning to unfold. The closure of old facilities and increasing industry concentration will provide sustained profit support for leading enterprises.
For downstream weaving and fabric procurement companies, this means that bargaining power for polyester raw materials is narrowing. The low-price dividends enjoyed in the past two years due to overcapacity are fading. In the long term, raw material costs will gradually return to a reasonable profit range.