PET Bottle Chip Overcapacity Drags Down Veteran Leader; Sanfangxiang's Delisting Warning Reflects Accelerating Industry Shakeout

Sanfangxiang, a veteran polyester leader, posted three consecutive years of losses totaling 1.628 billion yuan, with a loss of 885 million yuan in 2025 alone. Its 2025 annual report received a 'disclaimer of opinion' and an 'internal control adverse opinion', pushing the company to the brink of delisting. This is not just a corporate financial crisis but a microcosm of the severe overcapacity and supply chain fragility plaguing the PET bottle chip industry.

Overcapacity as the Root Cause

Between 2023 and 2024, domestic PET bottle chip capacity surged past 20 million tons per year, while actual demand stood at only 12 million tons—a gap of 8 million tons. This implies an industry utilization rate below 60%, squeezing product spreads. Sanfangxiang, the second-largest producer, pivoted to bottle-grade PET chips and PTA after acquiring Hailun Petrochemical in 2020 for 7.35 billion yuan. Profits peaked at 818 million yuan in 2022, then collapsed into three years of losses totaling 1.628 billion yuan. The company's narrow supply chain, covering only the PTA-to-PET chip segment, left it vulnerable to upstream PX price volatility. Its trading revenue fell 59.97% in 2025 to 1.713 billion yuan, underscoring the weakness of a single-link business model.

Debt and Governance Risks

Beyond losses, Sanfangxiang faces guarantee defaults and related-party transaction risks. As of the latest filing, overdue debts under guarantees for subsidiaries reached 522 million yuan, or 10.82% of audited net assets. A subsidiary, Hailun Petrochemical, defaulted on 25.64 million yuan in lease payments to Taiping石化 Financial Leasing, for which Sanfangxiang provided irrevocable joint liability guarantees. More alarmingly, accounts receivable from related parties stood at 3.561 billion yuan as of end-2025, with only 107 million yuan in bad debt provisions. Auditors could not obtain sufficient evidence on recoverability. Controlling shareholder Sanfangxiang Group and Jiangsu Sanfangxiang International Trade have had their shares judicially frozen, potentially triggering a change in control. A 600 million yuan related-party guarantee for the parent company remains unprovisioned.

Anti-Involution Policy as a Lifeline

The crisis stems from industry 'involution', and government anti-involution measures may offer a way out. In the second half of 2025, national authorities convened a symposium of PTA and bottle chip leaders to discuss operations and projects. Amid supply-demand mismatch and thin margins, the meeting was seen as a move to curb cutthroat competition. By Q1 2026, Sanfangxiang turned profitable with a net income of 32.74 million yuan, aided by price rebounds in the polyester chain triggered by the Strait of Hormuz blockade. Its stock rebounded from the 1-yuan delisting threshold. However, Lianhe Credit downgraded the company's rating to A- with negative outlook in June 2026. The controlling shareholder's share auction was postponed due to execution objections, but the sword of Damocles still hangs.

Practical Recommendations

For Buyers - Screen supplier financial health: Prioritize producers with integrated supply chains and high raw material self-sufficiency to avoid supply disruptions from single-link failures. - Diversify sourcing: During industry consolidation, establish multi-supplier backup plans to reduce reliance on any single dominant player. - Leverage price volatility: Given fluctuating PET chip prices tied to PX and geopolitics, consider short-term floating-price contracts to lock in cyclical lows.

For Exporters - Assess credit and payment risks: For orders involving financially stressed firms like Sanfangxiang, require advance payments or letters of credit to avoid receivables bad debts. - Monitor destination market policies: When exporting PET chips to the EU or US, ensure compliance with anti-dumping and environmental regulations, and prepare certifications in advance. - Adjust product mix: In a low-margin environment, shift toward high-value differentiated products such as heat-resistant or recyclable bottle chips to boost export unit prices.