A 46-year-old industrial chain is undergoing its most brutal capacity shakeout. Sanfangxiang, headquartered in Jiangyin, Jiangsu, evolved from a village workshop in 1980 to an A-share listed company in 2003, and then transformed into a polyester bottle chip producer through a 7.35 billion yuan acquisition of Hailun Chemical in 2020. Now, after three consecutive years of losses and an audit opinion of 'disclaimer of opinion,' the company stands at the brink of delisting. This is not just a single company's turning point but a microcosm of China's polyester bottle chip industry transitioning from wild expansion to rational adjustment.
The Price of Overcapacity
Sanfangxiang's loss trajectory closely mirrors the capacity release cycle of the polyester bottle chip industry. From 2023 to 2024, domestic capacity surged past 20 million tons per year, while downstream demand hovered around 12 million tons, creating a gap of nearly 8 million tons. According to public industry data, Sanfangxiang accumulated losses of 1.628 billion yuan from 2023 to 2025, with 2025 alone posting an 885 million yuan loss, nearly doubling year-on-year. The deeper issue lies in the company's narrow supply chain structure, covering only the PTA-to-polyester bottle chip segment while relying entirely on external purchases for the core raw material PX. This leaves profit margins highly vulnerable to upstream price fluctuations, with little hedging capability. In 2025, its trading revenue plummeted 59.97% year-on-year, reflecting the compression of product spreads to below breakeven levels.
Guarantee Chain and Bad Debt Risks
Beyond operational losses, Sanfangxiang faces a chain reaction from overdue guarantees. As of the latest filing, cumulative overdue debts from guarantees provided to subsidiaries reached 522 million yuan, accounting for 10.82% of net assets. Notably, its wholly-owned subsidiary Hailun Petrochemical failed to pay due rent under a financial lease, triggering the parent company's guarantee obligations. More concerning, as of end-2025, accounts receivable from related parties stood at 3.561 billion yuan, but only 107 million yuan in bad debt provisions had been set aside. The auditor explicitly stated it could not obtain sufficient evidence to confirm the recoverability of these receivables. This intertwined risk structure of guarantees and receivables is not unique in the polyester industry, where many companies relied on related-party transactions and mutual guarantees to sustain capacity expansion. When end-product prices decline, credit risks across the entire chain become exposed.
Policy Intervention: Turning Point Against Internal Competition
The supply-demand imbalance has drawn regulatory attention. In the second half of 2025, relevant national authorities convened a symposium with leading PTA and bottle chip producers, focusing on 'internal competition.' The backdrop was that gross margins in the polyester bottle chip sector had fallen to historical lows, with some companies experiencing negative cash flow. Following the policy signal, supply-side contraction began to emerge. In Q1 2026, Sanfangxiang reported a net profit of 32.74 million yuan, turning around from losses. Meanwhile, geopolitical tensions in the Strait of Hormuz triggered a rebound in polyester chain product prices, temporarily improving margins. However, a modest stock price recovery and escape from the 1-yuan delisting threshold do not mask the fundamental issues: the controlling shareholder's shares are under judicial freeze, and potential auction could change control of the company.
Transmission to Upstream and Downstream
The industry shakeout is reshaping relationships along the supply chain. For upstream PX suppliers, rising credit risk among downstream customers means longer payment cycles. For downstream beverage and packaging companies, a shrinking supplier base could lead to higher procurement concentration and reduced bargaining power. In regional industrial clusters such as Jiangyin, Suzhou, and Shaoxing, capacity rationalization is underway. Some small and medium-sized polyester chip plants have voluntarily reduced or halted production, pushing industry operating rates from 85% in 2024 to around 70% by mid-2026.