The six major Chinese polyester leaders collectively posted nearly RMB 30 billion in net profit for H1 2026, with even the slowest grower nearly doubling earnings and the fastest surging over 25 times year-on-year. This is not a recovery; it's a profit feast fueled by an oil windfall and capacity discipline.
Profit Explosion: From Near Loss to Cash Machine
Hengli Petrochemical led with RMB 7.2 billion net profit, up 136%; Hengyi Petrochemical reported RMB 5.5–6.0 billion, an astonishing 2,326–2,546% increase. Shenghong, Rongsheng, and Tongkun posted profits of RMB 4.2–5.0 billion, RMB 5.0–5.2 billion, and RMB 4.1–4.5 billion respectively, with growth rates between 273% and 1,194%. Xinfengming saw profits of RMB 1.38–1.5 billion, up 94–111%.
What does this mean? In 2025, when the industry was mired in price wars, PTA lost up to RMB 200 per ton. By H1 2026, processing spreads had fully recovered, and the fully integrated plants of leading companies were running at high utilization. Hengli's 20 million-ton refining-chemical integration and Rongsheng's Zhejiang Petrochemical mega-plant became profit stabilizers.
Two Engines: Oil Windfall and Anti-Internal Competition
The profit surge was no accident. In early 2026, escalating US-Iran tensions disrupted shipping through the Strait of Hormuz, driving Brent crude from $61/barrel in January to $118/barrel in March, with the Q2 average stabilizing around $99/barrel. Higher oil prices directly widened processing spreads for PX, PTA, and polyester filament.
Crucially, Chinese refiners, with diversified crude import sources, suffered far less from geopolitical disruptions than competitors in Japan and South Korea, capturing the benefits of the oil price hike domestically.
Another key factor was "anti-internal competition." In late 2025, major polyester fiber producers reached a voluntary production cut agreement, actively reducing operating rates for mainstream POY and FDY products. Coupled with tightened approval for new capacity under dual-carbon policies and accelerated phase-out of outdated capacity, the supply side of PTA and polyester filament contracted in an orderly manner. Research reports indicate the current expansion cycle is near its end, and the supply-demand balance is expected to improve further.
Looming Concerns: Oil Price Volatility and Capacity Restart Risks
Can the profit feast continue? The answer is less certain. While Brent remains elevated, geopolitical uncertainties mean oil prices could correct sharply. If oil falls, processing spreads will shrink quickly, turning profit momentum negative.
More worrying is the risk of capacity restart. High profits are tempting some idled capacity to resume production. If industry discipline weakens, supply could flood back, reigniting price wars. Tongkun's profit forecast specifically noted that operating data from Zhejiang Petrochemical is unaudited and subject to adjustment, reflecting caution about earnings sustainability.
For downstream buyers, raw material prices are at highs, putting significant cost pressure on procurement. For factories and exporters, sharp price swings increase inventory management risks and make long-term contract pricing more difficult.