Polyester Titans' H1 Earnings Surge: How Oil Windfall and Anti-Overcapacity Policies Reshape the Chemical Fiber Landscape

In the first half of 2026, Hengli Petrochemical reported a net profit of approximately 7.2 billion yuan, up 136% year-on-year; Hengyi Petrochemical posted 5.5-6.0 billion yuan, a staggering increase of 2,326%-2,547%; Eastern Shenghong recorded 4.2-5.0 billion yuan, up 987%-1,195%; Rongsheng Petrochemical saw 5.0-5.2 billion yuan, a gain of 730%-764%; Tongkun Group achieved 4.1-4.5 billion yuan, up 274%-310%; and Xinfengming reported 1.38-1.5 billion yuan, up 95%-112%. These numbers reflect a dramatic shift from industry-wide losses to a collective profit bonanza along the polyester chain.

The Geopolitical Oil Dividend At the start of 2026, escalating US-Iran tensions disrupted shipping through the Strait of Hormuz, sending Brent crude from $61/barrel in January to a peak of $118 in March, with Q2 stabilizing around $99. The surge widened refining margins significantly. Hengli's 20-million-ton integrated refinery ran at high utilization, while Rongsheng's Zhejiang Petrochemical project became a major profit contributor, and Tongkun's stake in the same venture also generated substantial returns. Crucially, Chinese refiners, with diversified import sources, suffered less from the blockade than their Japanese and Korean peers, giving them a unique competitive edge.

Anti-Overcapacity Policies Reshape Supply Beyond the oil windfall, a more fundamental shift is underway in supply-demand dynamics. Over the past two years, the PX-PTA-polyester filament chain was mired in price wars due to overcapacity, with PTA at one point losing 200 yuan per ton. However, in 2026, no new PTA capacity came online, and outdated capacity both domestically and abroad exited faster, ceding market share to integrated leaders. Xinfengming's announcement explicitly credits a voluntary production cut agreement among top fiber producers in late 2025, targeting POY and FDY products, along with tighter approval for new capacity under dual-carbon policies. Hengyi also benefited from the anti-overcapacity push in PTA and polyester, which improved profitability.

Profit Distribution Along the Chain The earnings surge is heavily skewed toward upstream players. Hengyi's Brunei refinery gained from tight Southeast Asian fuel supply, while Shenghong's aromatics chain—with over 10 million tons of PX, PTA, and benzene capacity—magnified margins. Downstream filament producers like Tongkun and Xinfengming saw 200%-300% profit growth, but absolute gains were far more modest. This indicates that current profit distribution favors companies with integrated refining capacity, while pure polyester processors benefit less.

Outlook: Oil's Irreversibility and Policy Continuity With Middle East tensions rising again, crude prices are likely to stay elevated. Research institutions note that the industry expansion cycle is nearing its end, and anti-overcapacity measures continue, suggesting further improvement in supply-demand balance. However, risks remain: the high profits of Hengli and Rongsheng are highly sensitive to crude-chemical spreads. A rapid oil price correction could quickly erode margins. Additionally, Tongkun has flagged that Zhejiang Petrochemical's data is unaudited, posing a risk to forecast accuracy.

For Buyers - Monitor PTA-polyester filament price linkage: High upstream margins mean cost pressure will pass downstream. Consider long-term contracts to lock in price ranges. - Diversify suppliers: While top players gain pricing power, smaller fiber producers may offer competitive quotes—but assess their capacity stability and quality consistency.

For Foreign Traders - Leverage the cost window: Chinese polyester products currently enjoy a cost advantage over Southeast Asian and Indian rivals, making exports more attractive. - Watch for capacity additions: High profits may trigger new expansion plans. Use forward contracts to hedge against potential price pressure from increased supply later this year.