PTA Overcapacity Backlash: Sanfangxiang's Delisting Crisis Reflects Structural Woes in Polyester Sector

A veteran polyester giant founded in 1980 is now facing its toughest test since listing. Sanfangxiang received 'disclaimer of opinion' and 'negative internal control opinion' on its 2025 annual report, triggering dual delisting risk warnings, while controlling shareholder shares are under judicial auction. The Jiangyin-based chemical fiber company, which shifted from textile printing and dyeing to polyester bottle chip and PTA, has fallen deeper into industry quicksand.

The data reveals a more alarming industry picture than any single case. From 2023 to 2024, domestic polyester bottle chip capacity surged past 20 million tons per year, while downstream demand hovered around only 12 million tons. The supply-demand gap widened sharply, compressing product spreads to historic lows. As the second-largest producer, Sanfangxiang enjoyed only two years of profit growth after its 'snake-swallowing-elephant' acquisition of Hailun Chemical in 2020—profits of 630 million yuan in 2021 and 818 million yuan in 2022. But since 2023, it has posted three consecutive years of losses totaling 1.628 billion yuan, with the 2025 loss alone reaching 885 million yuan, expanding significantly year-on-year.

Single-Chain Structure and Raw Material Dependence: A Deadly Combination

Sanfangxiang's losses are not isolated, but its structural weaknesses are especially pronounced. The company covers only the PTA-to-polyester bottle chip segment, relying entirely on purchased PX as its core raw material. During the peak of PTA capacity expansion, other polyester leaders integrated upstream into PX, while Sanfangxiang lacked a vertical chain, leaving its cost control vulnerable. Once upstream PX prices rose, margins were quickly squeezed. In 2025, the company's trading revenue fell 59.97% year-on-year to just 1.713 billion yuan, reflecting a severe decline in core business cash generation.

Deeper risks lurk in the financial chain. As of the latest announcement, cumulative overdue debts guaranteed by the company for its subsidiaries and inter-subsidiary guarantees reached 522 million yuan, accounting for 10.82% of the most recent audited net assets. Among them, the wholly-owned subsidiary Hailun Petrochemical failed to pay 25.6376 million yuan in rent due to Taiping石化 Financial Leasing, for which Sanfangxiang provided irrevocable joint liability guarantees. Auditors explicitly stated they could not obtain sufficient appropriate audit evidence regarding the recoverability of 3.561 billion yuan in related-party accounts receivable, against which only 107 million yuan in bad debt provisions had been made—a stark contrast.

Industry 'Involution' Hits a Ceiling, Policy Intervention Offers Breathing Room

Sanfangxiang's crisis is essentially a microcosm of industry overcapacity. Between 2023 and 2024, the PTA and bottle chip sectors experienced an unprecedented expansion race. The state has begun to intervene. In the second half of 2025, relevant authorities convened a symposium with leading PTA and bottle chip companies to discuss industry operations and ongoing projects. Industry insiders view this as a key step to prevent and resolve 'involutionary' competition and promote stable industry operations, essentially coordinating capacity release to ease supply-demand imbalances.

Policy effects are already visible. In Q1 2026, Sanfangxiang achieved a net profit of 32.7409 million yuan, turning around year-on-year. Additionally, the Strait of Hormuz blockade caused a rebound in polyester chain product prices, improving margins. The company's stock price also temporarily moved away from the 1-yuan delisting 'warning line.' However, in June 2026, Lianhe Credit downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook, and also downgraded its convertible bond rating. Although the controlling shareholder's share auction was temporarily suspended due to execution objections, the risk of a change in control remains.

Industry Implications and Future Direction

The Sanfangxiang case offers three key observations for the polyester industry: First, capacity expansion must align with demand growth; otherwise, scale advantages become loss traps. Second, the degree of vertical integration determines resilience; single-segment players have almost no buffer against price volatility. Third, financial prudence is a survival baseline during downturns; excessive guarantees and related-party transactions amplify risk.

Currently, the policy tone against involution is clear, but capacity clearance takes time. For polyester bottle chip and PTA, projects launched in 2024-2025 will gradually reach full production in the next two years, potentially sharpening supply-demand conflicts. Whether Sanfangxiang can achieve a turnaround through debt restructuring, asset sales, or strategic investor introduction depends on its ability to resolve credit crises and address chain weaknesses within the window period.

For Buyers - Monitor the financial health of polyester bottle chip suppliers, prioritizing those with high vertical integration and low debt ratios to avoid production disruptions due to supplier shutdowns. - Leverage the current buyer's market to lock in medium-to-long-term contracts while diversifying sourcing to reduce single-supplier dependency.

For Foreign Trade Firms - Closely track credit rating changes and debt resolution progress of leading companies like Sanfangxiang; reassess accounts receivable recovery risks and adjust payment terms or switch to L/C settlement if necessary. - Monitor geopolitical events like the Strait of Hormuz for short-term impacts on PTA and PX prices, using futures to hedge raw material cost volatility and avoid order losses from sudden cost spikes.