In the first half of 2026, China's polyester industry witnessed an unprecedented profit boom. Hengli Petrochemical reported a net profit of 7.2 billion yuan, up 136% year-on-year; Hengyi Petrochemical saw profits as high as 6 billion yuan, surging over 2,300%; Rongsheng Petrochemical's net profit exceeded 5 billion yuan, up over 700%; Shenghong, Tongkun, and Xinfengming also posted gains of 987%, 273%, and 94% respectively. This is not an isolated case but a collective explosion across the sector.
Dual Engines Behind the Profit Surge
The core drivers come from two dimensions: external oil price windfalls and internal supply-demand restructuring.
In early 2026, the US-Iran conflict escalated, disrupting shipping through the Strait of Hormuz. Brent crude surged from $61/barrel in January to $118/barrel in March, stabilizing at $99/barrel in Q2. Chinese refiners, with diversified crude import channels, suffered less impact than Japan and South Korea, becoming beneficiaries of the oil price spike. For example, Hengyi's Brunei project saw widened spreads due to persistent supply shortages in Southeast Asian refined products, directly boosting refining profits.
Simultaneously, the industry's 'anti-involution' policy is reshaping supply. Over the past two years, PTA and polyester filament suffered from overcapacity and price wars, with PTA losing up to 200 yuan per ton. But in 2026, new capacity approvals tightened, and backward capacity at home and abroad accelerated exit, ceding market share to leaders. Hengli's 20 million-ton refining-chemical integration and Shenghong's 2.8 million-ton PX capacity ran at high loads, fully leveraging their integrated advantages as spreads recovered.
From Loss to Profit Machine: The Industrial Logic
The profit explosion is not accidental but a result of vertical integration and horizontal synergy.
Rongsheng, for instance, optimized its mega refining-chemical units through technical upgrades, enhancing operational efficiency. As crude prices rose, its full-chain advantages became more pronounced. Tongkun's core driver was the recovery of PTA and polyester filament processing spreads, plus improved profitability from its stake in Zhejiang Petrochemical. Xinfengming's growth directly stemmed from a voluntary production cut agreement among top fiber firms in late 2025, which reduced POY and FDY output and alleviated oversupply.
Another key variable is the profit redistribution along the PX-PTA-polyester filament chain. PTA, which had been loss-making due to overcapacity, saw spreads turn positive in 2026 as no new capacity came online and backward capacity exited. For buyers, this means upstream price volatility is decreasing, but bargaining power may shrink.
Risks and Sustainability: Oil Volatility and Demand Resilience
Despite stellar H1 results, the sustainability of polyester leaders' 'profit machine' faces multiple tests.
First, oil price uncertainty. The Middle East situation has tensed again, with crude potentially rising irreversibly. While high oil benefits refiners, prices above $120/barrel could pass cost pressure downstream, curbing demand. Second, demand resilience. Polyester filament's downstream includes textiles and home furnishings; a global economic slowdown could slash export orders. Third, the execution of 'anti-involution' policies needs monitoring. If leaders resume expansion after profit recovery, the supply-demand balance could worsen. Research notes the expansion cycle is nearing its end, but the pace of SME exit remains uncertain.