In the first half of 2026, China's chemical fiber industry staged a stunning reversal. After Hengyi announced a net profit increase of over 23 times year-on-year, Shenghong reported on July 5 that its H1 net profit attributable to shareholders was between 4.2 billion and 5.0 billion yuan, a surge of 987% to 1194%. These figures mark a strong breakout from two years of 'involution-style' losses.
Geopolitical Conflicts Reshape Crude Cost Dynamics
Since early 2026, escalating US-Iran tensions disrupted Hormuz Strait shipping, sending Brent crude from $61/barrel to a peak of $118/barrel in March. Q2 averaged $99/barrel, widening refining margins. China's diversified crude import channels shielded its refiners from supply shocks, unlike Japan and South Korea. Shenghong explicitly cited 'crude price hikes expanding product spreads' as a key profit driver.
Capacity Clearance Ends the 'Loss of 200 yuan per ton' Era
For two years, the PX-PTA-polyester filament chain suffered overcapacity, with PTA spot prices losing 200 yuan per ton. But in 2026, no new PTA capacity came online, while obsolete capacity both domestically and overseas exited rapidly. Industry reports indicate the expansion cycle is ending, and anti-involution policies are rebalancing supply and demand. Integrated leaders with scale, low costs, and high chemical yields captured the most gains. Shenghong's Q2 net profit surged 93%-149% QoQ and 60-78 times YoY.
Downstream Implications for Buyers
Polyester profit surges will push up filament and staple prices. Smaller weavers should lock long-term contracts or explore alternatives like recycled polyester. Geopolitical risks remain, so flexible inventory management is key.