A veteran polyester enterprise founded in 1980 now finds itself under the shadow of dual delisting risk warnings. The crisis at Sanfangxiang is not merely a single company's struggle but a microcosm of the overcapacity and cutthroat competition gripping the entire PET bottle chip industry.
The Double Squeeze: Overcapacity and a Narrow Chain
According to China Customs and industry public data, between 2023 and 2024, domestic PET bottle chip capacity surged past 20 million tons per year, while market demand stood at only about 12 million tons. This 8-million-ton gap relentlessly compressed product margins. Sanfangxiang, the industry's second-largest producer, pivoted to bottle-grade polyester chips and PTA after acquiring Hailun Petrochemical for 7.35 billion yuan in 2020. Profits briefly rose to 630 million yuan in 2021 and 818 million yuan in 2022, but the subsequent three years saw cumulative losses of 1.628 billion yuan, including a single-year loss of 885 million yuan in 2025.
More critically, Sanfangxiang's chain covers only the PTA-to-bottle-chip segment, leaving its core raw material PX entirely dependent on external purchases. This narrow setup offers no buffer when upstream prices rise. In 2025, its trading revenue plunged 59.97% year-on-year to just 1.713 billion yuan, a direct result of cost pressure from upstream and weak downstream demand.
Debt Risks and Audit Uncertainties
As of the latest filing, overdue debts guaranteed by Sanfangxiang for its subsidiaries reached 522 million yuan, equivalent to 10.82% of its latest audited net assets. Among these, a 25.64 million yuan lease payment from wholly-owned subsidiary Hailun Petrochemical to Taiping石化 Financial Leasing went unpaid. The company's accounts receivable from related parties stood at 3.561 billion yuan, but only 107 million yuan in bad debt provisions had been set aside. Auditors consequently issued a "disclaimer of opinion" and an "adverse internal control opinion."
Shares held by the controlling shareholder, Sanfangxiang Group, and its affiliates have been frozen. A public auction initiated in May 2026 was temporarily halted due to an enforcement objection, but the risk of a change in actual control remains. In June 2026, Lianhe Credit Rating downgraded the company's long-term credit rating to A- with a negative outlook, and similarly downgraded the "Sanfang Convertible Bond."
A Breather from State Intervention, Yet Unresolved Issues
In the second half of 2025, Chinese authorities convened a symposium with leading PTA and bottle chip enterprises, focusing on supply-demand mismatch and thin profit margins. The meeting was widely seen as a key move to prevent and resolve "involution-style" competition. Subsequently, industry operating rates were adjusted, and pricing gradually recovered. In Q1 2026, Sanfangxiang posted a net profit of 32.74 million yuan, reversing losses year-on-year. Geopolitical events in the Strait of Hormuz also temporarily boosted polyester chain product prices, offering a brief respite.
However, whether the turnaround is sustainable depends on the pace of capacity elimination. Current capacity utilization in the domestic PET bottle chip industry remains below 60%, and the exit of small and medium players has yet to gain momentum. While Sanfangxiang has temporarily escaped the 1-yuan delisting threshold, its fundamental issues—deteriorating debt structure, unstable control, and reliance on external raw materials—remain unresolved.
Industry Lessons: From Scale Race to Survival Quality
Sanfangxiang's predicament serves as a wake-up call for the polyester industry. Over the past decade, most leading players competed by expanding capacity, leading to severe overcapacity in both PTA and bottle chip segments. When demand growth slows and raw material costs become volatile, companies with single-stage operations and high leverage are the first to buckle.
The competitive logic is shifting:
- Vertical integration, from PX to polyester bottle chips, is becoming critical to hedge raw material risks.
- Product differentiation and higher value-add—such as functional bottle chips or recycled polyester—offer a way out of price wars.
- Financial health will replace scale rankings as the primary metric for investors and banks assessing corporate risk.