The consequences of overcapacity in the PET bottle chip sector have finally materialized in corporate financial reports. A veteran polyester leader with 46 years of history now stands at the brink of delisting.
After its 2025 annual report received a 'disclaimer of opinion' and 'adverse internal control opinion,' a dual delisting risk warning was triggered. The controlling shareholder's shares have been placed under judicial auction. Sanfangxiang (600370.SH) is facing the most severe survival test since its listing in 2003.
The Price of Overcapacity
Sanfangxiang's loss trajectory clearly reflects the evolution of supply-demand imbalance in the polyester industry. In 2021, the company's net profit was 630 million yuan, rising to 818 million yuan in 2022. But from 2023 onward, it plummeted, with cumulative losses over three years reaching 1.628 billion yuan. In 2025 alone, the loss hit 885 million yuan, nearly doubling year-on-year.
The root cause lies in the concentrated release of PET bottle chip capacity. Industry public data shows that from 2023 to 2024, domestic PET bottle chip capacity exceeded 20 million tons per year, while downstream demand was only about 12 million tons, leaving a supply-demand gap of 8 million tons. Product spreads have continuously shrunk, severely squeezing the entire chain's profits. As the industry's second-largest producer, Sanfangxiang's aggressive capacity expansion actually exacerbated its own losses.
More critical is the fragility of its industrial chain layout. Sanfangxiang only covers the PTA to PET bottle chip segment, with its core raw material PX entirely purchased externally. Once upstream PX prices rise, the company's weak cost control capability is fully exposed. In 2025, the company's trading business revenue was 1.713 billion yuan, down 59.97% year-on-year, further confirming its loss of market bargaining power.
Guarantee Chain and Related-Party Transaction Risks
Beyond operational losses, Sanfangxiang is mired in guarantee defaults. As of the latest announcement, the company's cumulative overdue debts for guarantees provided to subsidiaries reached 522 million yuan, accounting for 10.82% of the most recent audited net assets. Among them, 25.6376 million yuan in overdue rent from subsidiary Hailun Petrochemical to Taiping石化 Financial Leasing is involved, for which the company provided irrevocable joint liability guarantees.
Risks from related-party receivables are equally alarming. At end-2025, the company's accounts receivable from related parties totaled 3.561 billion yuan, but only 107 million yuan in bad debt provisions had been accrued. Auditors explicitly stated they could not obtain sufficient appropriate evidence regarding the recoverability of these amounts. Shares held by controlling shareholder Sanfangxiang Group and Jiangsu Sanfangxiang International Trade have been frozen, and subsequent disposal could lead to a change in actual control.
The company has not recognized estimated liabilities for 600 million yuan in related-party guarantees provided to the controlling shareholder, suggesting a potential debt black hole far larger than disclosed figures. In May 2026, controlling shareholder shares were scheduled for public auction, but were postponed due to execution objections. The sword of Damocles remains suspended.
Anti-Involution Turnaround and Uncertainty
Sanfangxiang's survival hope partly rests on industry-level anti-involution actions. In the second half of 2025, national authorities convened a symposium with leading PTA and bottle chip enterprises to discuss industry operations and project progress. Against a backdrop of supply-demand mismatch and razor-thin margins, the meeting was seen as a key signal to prevent disorderly competition.
Policy intervention has shown initial results. In Q1 2026, Sanfangxiang achieved a net profit of 32.7409 million yuan, turning around from losses. The Strait of Hormuz blockade event led to price rebounds in the polyester chain, improving margins. The company's stock price also temporarily moved away from the 1 yuan delisting warning line.
But risks remain. On June 26, 2026, Lianhe Credit Rating downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook, and downgraded the 'Sanfang Convertible Bond' to A-. Debt extension negotiations, asset disposal progress, and recovery of related-party funds will determine whether this veteran enterprise can truly escape its predicament.