A listed company ranked second in the PET bottle chip industry, with cumulative losses exceeding 1.6 billion yuan over three years, its 2025 annual report receiving a 'disclaimer of opinion,' and the controlling shareholder's shares being auctioned by court—Sanfangxiang's crisis is not an isolated case but a concentrated eruption of deep-seated structural contradictions in China's polyester industry: overcapacity, a single-link chain, and razor-thin margins.
Double Squeeze from Overcapacity and Fragile Chain
Industry public data shows that from 2023 to 2024, domestic PET bottle chip capacity was released intensively, pushing total capacity beyond 20 million tons per year, while market demand stood at only 12 million tons per year—a supply-demand gap of 8 million tons. This means over one-third of capacity is idle or operating at low efficiency, compressing product spreads close to the cost line. As the second-largest producer, Sanfangxiang could not escape the 'involution' after its massive capacity expansion.
A more critical issue lies in the fragility of its industrial chain layout. Sanfangxiang's business only covers the PTA-to-PET bottle chip segment, with its core raw material PX entirely dependent on external purchases. When upstream PX prices fluctuate, the company lacks cost-hedging tools, repeatedly squeezing its profit margins. In contrast, industry leaders like Hengli and Rongsheng have formed integrated 'PX-PTA-Polyester' layouts, far outperforming single-link players in cost control. This structural weakness leaves Sanfangxiang with almost no buffer during industry downturns.
Debt Chain Rupture and Control Uncertainty
Beyond operating losses, Sanfangxiang faces a chain reaction from overdue guarantees. As of the latest announcement, the company's cumulative overdue debts for guarantees to subsidiaries and among subsidiaries reached 522 million yuan, accounting for 10.82% of the latest audited net assets. Among them, a wholly-owned subsidiary Hailun Chemical failed to pay certain due rent under a financial lease with Taiping石化 Financial Leasing, and the company, as an irrevocable joint liability guarantor, can only seek renewal or extension.
More worrying is the risk of related-party transactions. The 2025 annual report shows the company's accounts receivable from related parties reached as high as 3.561 billion yuan, but the accumulated provision for bad debts was only 107 million yuan, a provision ratio of less than 3%. The auditor explicitly stated that sufficient appropriate audit evidence could not be obtained for the recoverability of these amounts. Shares held by the controlling shareholder Sanfangxiang Group and Jiangsu Sanfangxiang International Trade have been frozen by court. If judicial disposal proceeds, the company's actual control may change.
Short-Term Effects of Policy Intervention and Long-Term Concerns
In the second half of 2025, relevant national authorities convened a symposium with leading PTA and bottle chip enterprises to discuss industry operations and ongoing project progress. This meeting was widely seen by the industry as a key signal to prevent and resolve 'involution-style' competition and promote stable industry operations. Under policy intervention, the supply-demand contradiction eased somewhat. In Q1 2026, Sanfangxiang achieved a net profit of 32.74 million yuan, turning around from losses.
However, whether the short-term effects of policy can be sustained remains highly uncertain. The momentum of capacity release in the PET bottle chip industry persists. Although new projects may slow down, digesting already-built capacity takes time. Recent geopolitical tensions in the Strait of Hormuz have pushed up prices in the polyester chain, but such external factors are unsustainable. Once the geopolitical premium fades, the industry may return to low-profit or even loss-making conditions.
Warnings for the Upstream and Downstream Chain
Sanfangxiang's case sends a clear signal to the entire polyester chain: companies that rely solely on scale expansion without vertical integration will be the first to suffer during overcapacity cycles. For downstream buyers, the financial health and industrial chain completeness of suppliers should become key dimensions in partner selection.