Sanfangxiang, the second-largest polyester bottle chip producer in China, reported a cumulative net loss of 1.628 billion yuan for 2025, with its annual report receiving a 'disclaimer of opinion' from auditors, triggering dual delisting risk warnings. This veteran Jiangyin company, founded in 1980, now stands on the brink of delisting. But its plight is not isolated—it epitomizes the deepening crisis of overcapacity and 'involution' in China's polyester industry.
The Price of Overcapacity
Industry data shows that between 2023 and 2024, domestic polyester bottle chip capacity surged past 20 million tons per year, while downstream demand was only 12 million tons—a gap of 8 million tons. Price spreads narrowed continuously. Sanfangxiang launched massive expansion during this period, only to see profits devoured by the ensuing competition.
In 2021, the company posted a net profit of 630 million yuan, rising to 818 million yuan in 2022. But from 2023 onward, it suffered three consecutive years of losses: 487 million yuan in 2024 and 885 million yuan in 2025. The direct cause was the collapse in product spreads due to supply-demand imbalance.
Another fatal weakness is Sanfangxiang's thin value chain. It only covers the PTA-to-bottle-chip segment, relying heavily on purchased PX as the core raw material. Any upstream price hike squeezes margins to near zero. In 2025, its trading business revenue fell 59.97% year-on-year to 1.713 billion yuan, reflecting extremely weak cost pass-through ability.
Debt Snowball and Audit Concerns
As of the latest filing, Sanfangxiang's overdue guarantee debts for subsidiaries totaled 522 million yuan, accounting for 10.82% of its most recent audited net assets. Among them, subsidiary Hailun Chemical owed 25.6376 million yuan in unpaid rent to Taiping石化 Financial Leasing, for which Sanfangxiang provided irrevocable joint liability guarantees.
More alarming is the accounts receivable issue. At end-2025, the company's receivables from related parties stood at 3.561 billion yuan, but the accumulated bad debt provision was only 107 million yuan. Auditors explicitly stated they could not obtain sufficient evidence on the recoverability of these amounts. The controlling shareholder's shares have been frozen by judicial order, and any subsequent disposal could lead to a change in control.
In May 2026, the controlling shareholder's shares were scheduled for public auction, though it was temporarily stayed due to an execution objection. The 'sword of Damocles' remains. On June 26, Lianhe Credit downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook, and also downgraded its convertible bonds to A-.
Anti-Involution Policy Provides Breathing Room
In the second half of 2025, national authorities convened a symposium with leading PTA and bottle chip companies to discuss industry operations and project progress. Against the backdrop of supply-demand mismatch and thin margins, the meeting was widely seen as a signal to curb 'involutionary' competition and stabilize the industry.
The policy's impact showed in Q1 2026: Sanfangxiang achieved a net profit of 32.7409 million yuan, reversing losses year-on-year. The 2026 blockade of the Strait of Hormuz also helped push up polyester chain product prices, improving margins. The company's stock price rebounded, temporarily escaping the 1-yuan delisting threshold.
But is the turnaround sustainable? The underlying problem of overcapacity remains unresolved. Sanfangxiang's case shows that external improvements alone cannot fix structural issues. Its thin value chain, raw material dependency, and high related-party receivables remain obstacles to long-term health.
Lessons for the Industry
Sanfangxiang's crisis sounds an alarm for the polyester sector:
- Capacity expansion must align with demand. In a market of 20 million tons capacity versus 12 million tons demand, any new capacity risks becoming a loss driver.
- Value chain extension is as crucial as cost control. Companies covering only one segment have little buffer against upstream and downstream volatility.
- Related-party transactions and guarantee risks must be tightly managed. A 3.561 billion yuan receivable balance with only 107 million yuan in provisions is a recipe for contagion in a downturn.