A 46-year-old legacy polyester leader now stands at the edge of delisting. Sanfangxiang's 2025 annual report received an 'adverse opinion' and an internal control disclaimer from auditors, triggering dual delisting risk warnings. This is not just a corporate crisis but a microcosm of the structural shakeout in the PET bottle-grade chip industry, where severe overcapacity has crushed margins.
The Price of Supply-Demand Imbalance
Industry data shows that between 2023 and 2024, China's PET bottle-grade chip capacity surged past 20 million tons per year, while downstream demand stood at only about 12 million tons. The resulting supply glut of 8 million tons drove product spreads to historic lows, squeezing profits across the sector. As the country's second-largest PET producer, Sanfangxiang posted cumulative losses of 1.628 billion yuan from 2023 to 2025, with a single-year loss of 885 million yuan in 2025—nearly double the previous year's deficit.
A deeper issue lies in the company's narrow supply chain. Sanfangxiang covers only the PTA-to-PET segment, with its core raw material PX entirely sourced externally. This leaves it with almost no cost buffer when PTA-PX spreads fluctuate. In an industry downturn, such a 'two-headed-out' structure proves particularly fragile.
Debt and Internal Control Crisis
Financial deterioration is only the tip of the iceberg. As of the latest disclosure, cumulative overdue debt under guarantees provided by Sanfangxiang for its subsidiaries reached 522 million yuan, accounting for 10.82% of its most recent audited net assets. Notably, its wholly-owned subsidiary Hailun Petrochemical failed to pay due rent under a financial lease, triggering the parent's irrevocable joint liability. More alarmingly, as of end-2025, the company's accounts receivable from related parties stood at 3.561 billion yuan, but only 107 million yuan in bad debt provisions had been recognized. Auditors explicitly stated they could not obtain sufficient evidence on the recoverability of these receivables—implying potential write-offs far exceeding current provisions.
The controlling shareholder's shares have been frozen by judicial order, and any subsequent disposal could trigger a change in actual control. In June 2026, Lianhe Ratings downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook. These signals collectively threaten the company's financing capacity and supply chain stability.
Anti-Involution Policy Provides Breathing Room
Notably, in the second half of 2025, national authorities convened a symposium with major PTA and PET producers to discuss industry operations and pipeline projects. Given the severe supply-demand mismatch, the meeting was widely interpreted as a policy signal to curb 'involution-style' competition. Subsequently, expansion plans slowed and product prices stabilized.
Sanfangxiang posted a net profit of 32.74 million yuan in Q1 2026, returning to profitability. Combined with geopolitical tensions in the Strait of Hormuz that lifted polyester chain prices, the company has temporarily moved away from the 1-yuan delisting threshold. However, whether this breather translates into a sustainable recovery depends on continued industry discipline and the company's ability to resolve its debt overhang.
Industry Lessons
Sanfangxiang's plight sends a clear warning to the entire polyester sector: in an era of chronic overcapacity, scale-driven competition is no longer viable. For buyers, this means supplier selection must go beyond price and capacity to include financial health, supply chain integration, and risk resilience.