Polyester Giants' Half-Year Explosion: How Oil Dividends and Anti-Involution Policies Reshape the Textile Industry

In the first half of 2026, China's six major polyester leaders posted combined net profits approaching 28 billion yuan. Hengli Petrochemical led with 7.2 billion yuan, while Hengyi saw a year-on-year surge of over 2,300%. Shenghong, Rongsheng, Tongkun, and Xinfengming recorded gains of nearly 10x, 7x, 3x, and 1x, respectively. This is not a simple cyclical recovery, but the result of geopolitical oil dividends and supply-side reforms.

Oil Dividends: Refining Arbitrage Amid Middle East Turmoil

In early 2026, escalating US-Iran conflict disrupted shipping through the Strait of Hormuz, driving Brent crude from $61/barrel in January to $118/barrel in March, with Q2 averaging $99. For integrated polyester leaders, diversified import channels (Middle East, Russia, Africa, Americas) mitigated supply shocks compared to Japan and South Korea. Hengli's 20 million ton/year refining complex, Hengyi's Brunei project, and Shenghong's 16 million ton/year unit all benefited from widened processing spreads. Hengyi's H1 net profit reached 5.5-6 billion yuan, driven by tight Southeast Asian product supply. Shenghong's Q2 net profit surged 93%-149% quarter-on-quarter and over 60x year-on-year, with smooth operations of its integrated refining complex as the direct engine.

Anti-Involution: From Overcapacity to Supply Contraction

Over the past two years, PTA and polyester filament industries suffered from 'involutionary losses,' with PTA losing 200 yuan per ton at its worst. But 2026 saw two key shifts: new capacity approvals tightened under dual-carbon policies, with zero new PTA capacity added; and backward capacity exited both domestically and internationally, ceding market share to integrated leaders. Xinfengming's announcement explicitly cited voluntary production cuts by major polyester fiber companies in late 2025 for POY and FDY products, easing oversupply. Tongkun's PTA and polyester filament processing spreads recovered significantly, lifting H1 net profit from 1.097 billion yuan to 4.1-4.5 billion yuan. Rongsheng's full-chain advantage became more pronounced as oil prices rose, with its Zhejiang Petrochemical project expanding product lines and improving profitability.

Industry Impact: How Long Will the Boom Last?

The current cycle resembles the 2017-2018 boom but with different drivers: oil dividends plus anti-involution policies, rather than PTA capacity gaps. Risks include: a potential oil price collapse if Middle East tensions ease; possible relaxation of production cut agreements; and whether downstream demand from textile and apparel exports can sustain high raw material prices. China's textile and apparel exports grew only 5%-8% in H1 2026, suggesting the profit surge is more supply-driven than demand-driven. For downstream buyers—fabric mills, garment factories, and exporters—this means significantly higher raw material costs, with polyester filament prices up about 30%-40% since the start of the year.

Practical Recommendations

For Buyers - Consider increasing inventory in the short term to lock in current prices, hedging against further oil price hikes. - Monitor capacity utilization and maintenance schedules of leading companies; adjust procurement timing if production cuts ease or oil prices retreat. - Include price adjustment clauses in long-term contracts to partially transfer oil price risk to suppliers.

For Exporters - Incorporate raw material price fluctuation clauses into order quotations to protect margins. - Monitor competitive dynamics in Southeast Asia and South Asia, as overseas capacity like Hengyi's Brunei refinery may alter regional supply patterns. - Use futures contracts for PTA and polyester filament to hedge raw material price risks.