The capacity frenzy in the polyester bottle chip industry over the past three years is pushing a veteran leader to the brink of delisting. Sanfangxiang, a company founded in 1980 and listed in 2003, received an audit disclaimer and an internal control adverse opinion for its 2025 annual report, triggering dual delisting risk warnings. The controlling shareholder's shares are under judicial auction, and guaranteed overdue debts are snowballing—this is not an isolated case but a microcosm of the supply-demand imbalance across the entire polyester chain.
The Cost of Overcapacity
Industry public data reveals that from 2023 to 2024, domestic polyester bottle chip capacity was released intensively, with total capacity exceeding 20 million tons per year, while downstream demand was only about 12 million tons per year. This means over 8 million tons of idle capacity, with the sharp supply-demand contradiction directly crushing product spreads. As the second-largest player in the industry, Sanfangxiang happened to launch large-scale expansion during this period, resulting in higher capacity but steadily declining profits.
Financially, after acquiring Hailun Chemical, Sanfangxiang recorded growth in the first two years: a profit of 630 million yuan in 2021 and 818 million yuan in 2022. But the situation reversed sharply from 2023, with cumulative losses over three consecutive years reaching 1.628 billion yuan, including a single-year loss of 885 million yuan in 2025, a significant year-on-year increase. More critically, the company's industrial chain layout is too narrow—it only covers the segment from PTA to polyester bottle chips, with the core raw material PX entirely dependent on external purchases. Once upstream PX prices rise, the weakness in cost control is fully exposed.
Ripple Effects in the Debt Chain
Beyond losses, guarantee defaults are another time bomb. According to the latest announcements, the cumulative overdue debts guaranteed by Sanfangxiang for its subsidiaries and inter-subsidiary guarantees have reached 522 million yuan, accounting for 10.82% of the latest audited net assets. Among them, the wholly-owned subsidiary Hailun Petrochemical owes 25.6376 million yuan in overdue rent to Taiping石化 Financial Leasing, for which the company provided irrevocable joint liability guarantees.
More worrying to the market is the risk of related-party transactions. As of the end of the 2025 reporting period, the company's accounts receivable from related parties amounted to 3.561 billion yuan, but the accumulated provision for bad debts was only 107 million yuan. The auditors explicitly stated that they could not obtain sufficient and appropriate audit evidence for the recoverable amount of these receivables. The controlling shareholder's shares are under judicial freezing, and if disposal proceeds, it could lead to a change in actual control. The company has not recognized a provision for the 600 million yuan in related-party guarantees provided to the controlling shareholder—these numbers point to enormous uncertainty.
A Turning Point with Policy Intervention
Sanfangxiang's crisis is not without a solution. In the second half of 2025, national authorities convened a symposium with leading PTA and bottle chip enterprises, discussing industry operations and progress on projects under construction. Against the backdrop of supply-demand mismatch and thin margins, this meeting was seen by the industry as an important signal to prevent and resolve 'involution-style' competition.
The policy effect was evident in Q1 2026. Sanfangxiang achieved a net profit of 32.7409 million yuan, turning around from a loss year-on-year. Coupled with the price rebound in the polyester chain triggered by the Strait of Hormuz blockade, profit margins have recovered. The company's stock price also rebounded, temporarily moving away from the 1-yuan delisting threshold. However, Lianhe Credit Rating downgraded the company's long-term credit rating to A- in June 2026 with a negative outlook, indicating that institutions remain cautious about its long-term solvency.
Industry Lessons and Survival Rules
The Sanfangxiang case serves as a warning for other polyester enterprises: capacity expansion cannot be divorced from demand fundamentals, and a single-segment industrial chain layout is extremely vulnerable to upstream volatility. The intensive capacity release from 2023 to 2024 essentially resulted from overly optimistic expectations about the PTA cycle, with Sanfangxiang standing at the frontline of 'involution.'
While government intervention can alleviate price pressure in the short term, in the long run, companies must build moats through technological upgrades, chain extension, or product differentiation. Sanfangxiang's 'snake swallowing elephant' acquisition was once seen as a model of transformation, but the subsequent losses prove that scale expansion does not automatically translate into competitiveness.