The polyester industry delivered a stunning performance in the first half of 2026. Hengli Petrochemical posted a net profit of 7.2 billion yuan, up 136% year-on-year; Hengyi Petrochemical reported 5.5-6 billion yuan, a surge of 2,326%-2,547%; Eastern Shenghong achieved 4.2-5 billion yuan, up 987%-1,195%; Rongsheng Petrochemical earned 5-5.2 billion yuan, up 730%-764%; Tongkun Group recorded 4.1-4.5 billion yuan, up 274%-310%; and Xinfengming reported 1.38-1.5 billion yuan, up 95%-112%. Combined net profits of the six giants are estimated between 27.4 billion and 29.4 billion yuan, far exceeding the previous year's level.
Dual Engines of Profit Surge
This profit explosion is no coincidence. Two core factors aligned: geopolitical tensions pushing up oil prices and industry-wide production cuts to combat overcapacity.
In early 2026, the US-Iran conflict escalated, disrupting shipping through the Strait of Hormuz. Brent crude surged from $61/barrel at the start of the year to $118/barrel in March, stabilizing around $99/barrel in Q2. Chinese refiners, with diversified crude import sources, suffered less impact than countries like Japan and South Korea that rely on single sources, becoming beneficiaries of the oil price rally.
Meanwhile, the PX-PTA-polyester filament yarn chain had suffered from overcapacity in the past two years, with PTA losing up to 200 yuan per ton. In late 2025, leading fiber companies reached a consensus to voluntarily cut production, reducing operating rates for mainstream products like POY and FDY. Coupled with dual-carbon policy constraints, new capacity approvals tightened, and outdated capacity exited faster, leading to an orderly contraction on the supply side.
Chain Transmission and Profit Recovery
From company announcements, the core logic of profit recovery is consistent: expansion of product processing spreads. Hengli's integrated 'oil, coal, chemical' ecosystem enables its full-chain facilities, including 20 million tons/year refining and 6 million tons/year coal chemicals, to run at high loads. Rongsheng leverages its world-class mega refining-chemical integration unit, improving flexible production capacity through technical upgrades. Tongkun benefits from PTA and polyester filament yarn spread recovery and improved profitability of its associate Zhejiang Petroleum and Chemical.
Notably, this profit growth is not universal. Research reports indicate that leading companies with advantages in scale, low cost, and high chemical yield benefit more in the recovery. This means small and medium enterprises may struggle to replicate the profit surge.
Long-term Supply-Demand Changes
The 'anti-involution' is not short-term. Industry data shows this expansion cycle is nearing its end. No new PTA capacity is added in 2026, and outdated capacity at home and abroad is accelerating exit, ceding market share to integrated leaders. Research reports emphasize that the supply-demand balance is expected to improve further.
However, uncertainties remain. Tongkun noted in its announcement that Zhejiang Petroleum and Chemical's data is unaudited and subject to adjustment. Moreover, renewed tensions in the Middle East could lead to irreversible oil price increases, which, while boosting refining margins, may also push up downstream costs and dampen end demand.