After three consecutive years of cumulative losses exceeding 1.6 billion yuan, and with its 2025 annual report receiving an adverse opinion from auditors, veteran polyester leader Sanfangxiang stands on the brink of delisting. Founded in 1980 and listed in 2003, the company's plight is not an isolated incident but a concentrated eruption of severe overcapacity in the polyester bottle chip sector and the risks of an overly narrow supply chain.
The Brutal Math of Overcapacity
Industry data shows that from 2023 to 2024, domestic polyester bottle chip capacity surged past 20 million tons per year, while downstream demand stagnated at around 12 million tons annually. This supply-demand gap of 8 million tons compressed product spreads and eroded industry profits. Sanfangxiang, as the second-largest domestic producer, saw its losses widen from 487 million yuan in 2024 to 885 million yuan in 2025.
More critically, Sanfangxiang's supply chain is highly concentrated, covering only the PTA-to-polyester bottle chip segment, with its core raw material PX entirely outsourced. This leaves the company with almost no cost buffer when upstream PX prices fluctuate. In 2025, its trading business revenue plummeted 59.97% year-on-year, further highlighting the vulnerability of a single-segment chain in a price war.
Debt Contagion and Governance Risks
The loss contagion is spreading to the debt side. As of the latest announcement, cumulative overdue debt guaranteed by Sanfangxiang for its subsidiaries reached 522 million yuan, accounting for 10.82% of its latest audited net assets. Subsidiary Hailun Petrochemical failed to pay 25.6376 million yuan in rent to Taiping石化 Financial Leasing, forcing the company to seek extensions.
More concerning are related-party transaction risks. At end-2025, accounts receivable from related parties stood at 3.561 billion yuan, with only 107 million yuan in bad debt provisions. Auditors stated they could not obtain sufficient evidence to confirm the recoverability of these amounts. The controlling shareholder's shares have been frozen, and if judicial disposal proceeds, control of the company could change. Lianhe Credit Rating downgraded the company's credit rating to A- in June 2026, with a negative outlook.
Policy Intervention and Uncertainty
The industry's plight drew policy attention. In the second half of 2025, national authorities convened meetings with major PTA and bottle chip producers to discuss capacity deployment and industry operations. The meeting was widely seen as a signal to curb cutthroat competition. Subsequently, supply growth moderated, and combined with the early 2026 Strait of Hormuz blockade that pushed up polyester chain product prices, Sanfangxiang posted a net profit of 32.74 million yuan in Q1 2026, turning around from a loss.
But a turnaround does not mean the all-clear. The controlling shareholder's share auction, though postponed due to an execution objection, remains a sword of Damocles. A 600 million yuan related-party guarantee has not been recognized as a contingent liability, and the recovery of large related-party receivables remains questionable. These structural risks cannot be resolved by short-term price rebounds.
Implications for the Supply Chain
Sanfangxiang's case sounds an alarm for the polyester industry: in an environment of severe overcapacity, blindly pursuing scale expansion only exacerbates internal attrition. Companies with a single-segment chain are extremely vulnerable to upstream raw material price volatility. Future competition will shift from 'capacity scale' to 'supply chain completeness' and 'cost control capability.'