In the first half of 2026, the combined net profit of China's six largest polyester leaders is expected to approach 28 billion yuan. Hengyi Petrochemical saw a year-on-year increase of over 2300%, while Eastern Shenghong reported nearly 1200% growth. Rongsheng Petrochemical's profit rose by more than 700%. This is not a simple cyclical rebound but a structural shift driven by the convergence of geopolitical oil price gains and industry-wide supply constraints.
Two Engines of the Profit Surge
The surge is rooted in two clear factors: a sharp rise in crude oil prices due to geopolitical conflicts, and a halt to years of cutthroat capacity expansion. The US-Iran conflict at the start of the year disrupted shipping through the Strait of Hormuz, sending Brent crude from $61 per barrel to $118 per barrel in March, stabilizing at $99 per barrel in the second quarter. Chinese refiners, with diversified crude import channels, suffered less supply shock than their Japanese and Korean counterparts and became beneficiaries of widening spreads. Hengli Petrochemical's 20 million-ton-per-year refining complex ran at high utilization, driving net profit to 7.2 billion yuan, up 136% year-on-year.
Meanwhile, the PTA-polyester filament chain had been mired in overcapacity for two years, with PTA processing margins turning negative at minus 200 yuan per ton. But in 2026, the situation reversed. No new PTA capacity came online in China, outdated capacity at home and abroad accelerated its exit, and leading companies reached a voluntary consensus to reduce production. Operating rates for mainstream products like POY and FDY were cut, effectively relieving supply pressure. Tongkun Group expects net profit of 4.1 to 4.5 billion yuan, up over 270%, driven primarily by the recovery in PTA and polyester filament processing spreads.
Structural Advantage of Integrated Leaders
The concentration of profits at the top has become more pronounced. Hengli's deep integration of oil, coal, and chemistry allows flexible product mix adjustments to maximize chemical yields during crude upcycles. Rongsheng, leveraging its world-class integrated refining complex, boosted flexible production capacity through technical upgrades, with first-half net profit expected between 5.0 and 5.2 billion yuan. Eastern Shenghong's PX capacity of 2.8 million tons and PTA capacity of 6.3 million tons, with total aromatics chain capacity exceeding 10 million tons, magnified the advantage of vertical integration during the upturn.
Xinfengming's case is particularly instructive. The polyester filament specialist expects first-half net profit of 1.38 to 1.5 billion yuan, up nearly 95% to 112%. The company explicitly attributes the growth to improved supply-demand dynamics—tighter approval for new capacity under dual-carbon policies and accelerated exit of outdated capacity. This suggests that even if oil prices retreat, the foundation for profit recovery remains solid as long as supply remains disciplined.
Sustainability Under Scrutiny
The current high profits rest on a fragile balance. The geopolitical oil price dividend is highly uncertain—any easing in the Middle East would directly compress refining spreads. While Hengyi's Brunei project benefits from tight refined product supply in Southeast Asia, this regional advantage is also subject to global refining capacity rebalancing. The bigger variable lies on the supply side. With no new PTA capacity in the first half of 2026, will the improved profitability tempt companies to break the production-cut consensus and restart expansion plans? Historically, every profit recovery in the polyester industry has triggered a new round of capacity competition, eventually eroding margins. Tongkun's cautious note in its earnings forecast—that Zhejiang Petrochemical's operating data is unaudited and subject to adjustment—reflects this concern.