A legacy polyester company with over four decades of history is teetering on the edge of delisting. Sanfangxiang reported three consecutive years of losses totaling 1.628 billion yuan, received a 'disclaimer of opinion' on its 2025 annual report, and saw its controlling shareholder's shares put up for judicial auction. These signals highlight the harsh reality facing China's polyester bottle-grade chip sector after the capacity boom.
Overcapacity: The Root of 'Inner Competition'
Sanfangxiang's plight is not an isolated case but a microcosm of the supply-demand imbalance in the polyester bottle-grade chip industry. According to publicly available industry data, from 2023 to 2024, domestic capacity was unleashed intensively, with total capacity exceeding 20 million tons per year, while market demand remained around 12 million tons per year. This means capacity utilization is below 60%, with a large portion operating at low margins or in the red.
As the second-largest player in the sector, Sanfangxiang could not escape the expansion wave. In 2020, it acquired Hailun Chemical for 7.35 billion yuan, pivoting its main business to bottle-grade polyester chips and PTA. Profits initially grew—recording 630 million yuan in net profit in 2021 and 818 million yuan in 2022—but then plummeted: losses from 2023 to 2025 totaled 1.628 billion yuan, with 2025 alone posting a loss of 885 million yuan.
Chain Vulnerability: The Weakness of a Single-Link Model
Compared to industry leaders, Sanfangxiang's industrial chain is notably narrow. It covers only the PTA-to-bottle-chip segment, with its core raw material PX entirely dependent on external purchases. This means when upstream PX prices rise, the company lacks a cost buffer, severely squeezing margins. In 2025, its trading business revenue fell 59.97% year-on-year to 1.713 billion yuan, further confirming its weak bargaining power.
A deeper issue is that this single-link business model offers little room to maneuver during an overcapacity cycle. When industry-wide spreads shrink and the profit pool dries up, companies without upstream or downstream synergy can only passively absorb losses.
Debt and Guarantees: A Looming Time Bomb
Beyond operating losses, Sanfangxiang faces serious debt risks. As of the latest filing, cumulative overdue debt from guarantees provided to subsidiaries reached 522 million yuan, accounting for 10.82% of the most recent audited net assets. Among them, a wholly owned subsidiary, Hailun Petrochemical, failed to pay 25.6376 million yuan in rent due to Taiping石化 Financial Leasing, for which the company bears irrevocable joint liability.
More concerning is that as of end-2025, the company's accounts receivable from related parties stood at 3.561 billion yuan, with only 107 million yuan in provisions for bad debts. Auditors explicitly stated they could not obtain sufficient evidence on the recoverability of these receivables. All shares of the controlling shareholder have been frozen by judicial order; if they enter judicial disposal, the company's actual control could change.
Policy Intervention: Is a Turning Point Coming?
In the second half of 2025, national authorities convened a symposium with leading PTA and bottle-chip companies, widely interpreted as a signal to prevent and resolve 'inner competition.' Against a backdrop of supply-demand mismatch and razor-thin margins, policy guidance toward industry self-discipline and capacity control has become a consensus.
The impact showed in the first quarter of 2026: Sanfangxiang posted a net profit of 32.7409 million yuan, turning around year-on-year. Additionally, the Strait of Hormuz blockade led to price rebounds in the polyester chain, improving margins. The company's stock price also temporarily moved away from the 1-yuan delisting threshold.
But rating agencies remain cautious. On June 26, 2026, Lianhe Credit downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook. Although the judicial auction of controlling shareholder shares was suspended due to an execution objection, the unresolved risks persist.
Industry Lessons: Survival Rules from Sanfangxiang
Sanfangxiang's case sounds an alarm for the polyester industry. Capacity expansion must align with demand growth; otherwise, scale amplifies risk. At the same time, vertical chain integration has become key to resilience. Leaders with integrated chains from PX to PTA to bottle chips enjoy clear advantages in cost control and profit stability.
For buyers and traders, selecting suppliers requires more than price evaluation—it demands assessment of chain completeness, debt structure, and cash flow health. In a period of industry shakeout, supply chain security outweighs short-term cost.