In the first half of 2026, the six major polyester listed leaders reported combined net profits exceeding 27 billion yuan, with Hengyi Petrochemical posting a year-on-year surge of up to 2546.88%, followed by Shenghong with nearly 1200%. This is no accidental earnings spike but a structural cyclical payoff from dual forces: geopolitical oil dividends and industry anti-cartel production cuts.
Oil Dividend: Refining Benefits Amid Geopolitical Conflict Brent crude rose from $61/barrel at the start of the year to a peak of $118/barrel in March, stabilizing at $99/barrel in Q2. The Middle East crisis and disruptions in the Strait of Hormuz directly widened spreads for oil products and chemicals. Hengyi's Brunei refining project benefited from tight Southeast Asian product supply, while Rongsheng's Zhejiang Petrochemical integration amplified advantages as crude prices rose.
Chinese refiners, with diversified crude import channels, suffered less from geopolitical blockades than Japan and South Korea, which rely on single sources. Hengli's 20 million tons/year refining and 6 million tons/year coal chemical units ran at high loads, leveraging the full-chain layout to capture spread gains.
Anti-Cartel: From Losses to Profit Recovery via Capacity Exit In the past two years, PTA once lost 200 yuan/ton, and polyester filament overcapacity led to price wars. The turning point came in late 2025 when top fiber firms agreed on voluntary production cuts for POY and FDY. Combined with dual-carbon policy constraints, new capacity approvals tightened, and obsolete capacity accelerated exit.
In H1 2026, no new PTA capacity came online, and domestic and foreign capacity exits ceded market share to integrated leaders. Tongkun's PTA and polyester filament spreads recovered significantly, with net profit up over 270%; Xinfengming's net profit rose nearly 112%, attributing to supply-demand optimization. Research notes indicate the expansion cycle is nearing its end, with anti-cartel policies improving the supply-demand outlook.
Capacity Layout and Future Growth These six leaders hold dominant positions in PX, PTA, and polyester filament. Shenghong has 2.8 million tons/year PX and 6.3 million tons/year PTA, with total aromatics capacity exceeding 10 million tons. Rongsheng leverages Zhejiang Petrochemical's world-scale integrated refining units for continuous technical upgrades. Hengyi's Brunei Phase II and coal-to-ethylene glycol projects, plus waste textile recycling initiatives, provide future profit potential.
However, Tongkun's warning that Zhejiang Petrochemical's data is unaudited underscores uncertainty in associated investment returns.
Transmission to Midstream and Downstream Rising polyester raw material costs are transmitting down the chain. Higher PTA and polyester filament prices directly raise fabric makers' procurement costs. In the weaving sector, raw material price hikes have not been fully passed through to grey fabric and finished fabric prices, squeezing margins.
On the export side, China's polyester product price competitiveness has weakened, but Middle East capacity disruptions have created substitution opportunities for Chinese integrated leaders. Hengli and Rongsheng's rising export shares confirm this trend.