In the first half of 2026, the Chinese polyester industry chain experienced a profit explosion. The six leading companies—Hengli, Hengyi, Rongsheng, Shenghong, Tongkun, and Xinfengming—reported total net profits exceeding 27 billion yuan, with year-on-year growth generally above 100%, and Hengyi Petrochemical leading with an increase of over 2300%. This data signals a clear shift: the industry has moved from the 'involutionary loss' cycle of the past two years into a new phase of profit restoration and center shift upward.
Dual Engines of Profit Explosion
The surge is no accident. The first driver comes from upstream: the US-Iran conflict in early 2026 escalated, disrupting shipping in the Strait of Hormuz. Brent crude surged from $61/barrel at the start of the year to $118/barrel in March, with Q2 averaging $99/barrel. For companies like Hengli with a 20-million-ton refining capacity and Zhejiang Petrochemical, higher crude prices directly widened refining margins. China's diversified crude import channels mitigated the impact of geopolitical blockades, making domestic refiners beneficiaries of this price swing.
The second driver is internal. Over the past two years, the PX-PTA-polyester filament chain suffered from price wars due to overcapacity, with PTA losing up to 200 yuan per ton. The turning point came in late 2025: major fiber producers reached a self-discipline production cut agreement, voluntarily reducing operating rates for mainstream products like POY and FDY. In 2026, no new PTA capacity was added, while outdated capacity at home and abroad accelerated its exit, ceding market share to integrated leaders. Improved supply-demand dynamics significantly restored processing spreads.
Structural Differences Behind Individual Performances
Despite the overall positive trend, the profit sources and growth quality vary among the six companies. Hengli Petrochemical posted a net profit of about 7.2 billion yuan, up 136%, with its deeply integrated 'oil, coal, chemical' ecosystem providing resilience. Hengyi Petrochemical reported 5.5-6 billion yuan in net profit, with its astonishing growth driven by tight Southeast Asian refined product supply and widening spreads, making the Brunei project a profit core. Shenghong's net profit of 4.2-5 billion yuan, up nearly 10 times year-on-year, relied on stable operations of its integrated refining complex. Rongsheng Petrochemical's 5-5.2 billion yuan net profit, up over 7 times, benefited from Zhejiang Petrochemical's full-chain advantages amid rising crude prices. Tongkun's 4.1-4.5 billion yuan net profit, up about 2.8 times, came from both its main PTA and polyester filament business recovery and investment income from Zhejiang Petrochemical. Xinfengming's 1.38-1.5 billion yuan net profit, up about 1 time, relied more on industry self-discipline cuts and capacity exits.
Sustainability of the Boom?
The key question: is this profit growth a flash in the pan or a long-term trend? On the supply side, institutional research indicates the current expansion cycle is nearing its end, with 'anti-involution' policies continuing and new capacity approvals tightening. On the demand side, downstream textile and apparel exports remain resilient, but domestic consumption recovery needs monitoring. On the cost side, Middle East tensions are re-escalating, with potential for further crude price increases. Overall, leaders with advantages in scale, cost, and high chemical yield are more certain to benefit from the recovery. However, Tongkun's warning that Zhejiang Petrochemical's operational data is unaudited and subject to adjustment highlights the volatility risk of investment income.