The three-year capacity surge in the PTA and PET bottle chip sectors is pushing legacy polyester companies toward the brink. Sanfangxiang, a veteran polyester leader founded in 1980 and listed in 2003, posted cumulative losses of 1.628 billion yuan from 2023 to 2025, with the 2025 loss alone reaching 885 million yuan, triggering a double delisting risk warning.
Industry Crisis from Supply-Demand Imbalance
Sanfangxiang's plight is a microcosm of the entire polyester chain's overcapacity issue. According to China Customs and industry public data, domestic PET bottle chip capacity surged to over 20 million tons per year during 2023-2024, while downstream demand was only about 12 million tons per year, creating a supply-demand gap of 8 million tons and compressing product spreads to near cost levels.
The PTA segment faced a similar fate. As multiple polyester leaders launched large-scale new units, domestic PTA capacity entered a new growth peak, tightly linking industry profits with the PTA cycle. After acquiring Hailun Chemical for 7.35 billion yuan in 2020, Sanfangxiang shifted its main business to PTA and bottle-grade PET chips, exactly when the expansion wave hit—capacity rose but profits did not follow.
Vulnerability of a Single-Link Chain
A deeper issue is Sanfangxiang's overly narrow industrial chain layout. The company only covers the PTA-to-PET bottle chip segment, relying heavily on external purchases for its core raw material, PX. This means any fluctuation in upstream PX prices leaves the company with almost no cost buffer. In 2025, its trading revenue plummeted 59.97% year-on-year to 1.713 billion yuan, a direct reflection of this structural weakness.
In contrast, other top players in the industry have built fully integrated chains from PX to polyester and downstream textiles or packaging, enabling mutual profit protection across links. Sanfangxiang's single-link model can profit during upcycles but becomes a profit-squeezed "sandwich layer" during oversupply downturns.
Chain Risks from Debt and Guarantees
Beyond operating losses, Sanfangxiang faces severe debt and guarantee risks. As of the latest announcement, cumulative overdue debts guaranteed by the company for its subsidiaries reached 522 million yuan, accounting for 10.82% of the most recent audited net assets. Among them, fully-owned subsidiary Hailun Petrochemical has defaulted on lease payments to Taiping石化 Financial Leasing.
More concerning are related-party transaction risks. As of end-2025, the company's accounts receivable from related parties stood at 3.561 billion yuan, but accumulated bad debt provisions were only 107 million yuan, leading auditors to issue a "disclaimer of opinion." The controlling shareholder's shares have been judicially frozen, and if subsequent judicial disposal occurs, the company's actual control may change. Additionally, the company has not recognized a contingent liability for a 600 million yuan related-party guarantee provided to the controlling shareholder, which, if triggered, would further erode net assets.
Turnaround Hope from Anti-Internal Competition Policies
The extreme internal competition has drawn national attention. In the second half of 2025, relevant national authorities convened a symposium with leading PTA and PET bottle chip companies to discuss industry operations and project progress. The meeting was widely seen as a key move to prevent and resolve "internal competition" and stabilize the industry.
Policy effects began to show in Q1 2026, with Sanfangxiang reporting a net profit of 32.7409 million yuan, turning around year-on-year. During the same period, geopolitical tensions in the Strait of Hormuz pushed polyester chain product prices higher, improving margins. The company's stock price also temporarily moved above the 1-yuan delisting threshold.
However, the sustainability of this improvement is questionable. In May 2026, the controlling shareholder's shares were put up for auction, though temporarily stayed due to objections. On June 26, Lianhe Credit Rating downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook. The company's true recovery depends on industry capacity reduction progress, its own debt resolution capability, and whether it can fill its industrial chain gaps.