The PET bottle chip industry is undergoing a brutal capacity shakeout. Sanfangxiang, a veteran polyester leader, faces delisting after its 2025 annual report received a disclaimer of opinion and its controlling shareholder's shares were auctioned. This is not an isolated case but an extreme microcosm of severe supply-demand imbalance.
Capacity Bubble: Supply Exceeds Demand by Nearly 70%
Industry data shows that from 2023 to 2024, domestic PET bottle chip capacity was intensively released, exceeding 20 million tons/year. In contrast, domestic demand was only about 12 million tons, leaving a gap of 8 million tons and capacity utilization below 60%. As the second-largest domestic producer, Sanfangxiang also expanded aggressively, but profits failed to keep pace.
Financially, Sanfangxiang posted profits of 630 million yuan in 2021 and 818 million yuan in 2022 after acquiring Hailun Petrochemical. However, the subsequent three years saw a sharp reversal, with cumulative losses reaching 1.628 billion yuan, including an 885 million yuan loss in 2025 alone.
Vulnerability of a Narrow Supply Chain
The root of Sanfangxiang's crisis lies in its overly concentrated industrial chain layout. The company only covers the link from PTA to PET bottle chips, relying entirely on purchased PX as its core raw material. This structure works well during boom times but leaves margins squeezed when upstream prices rise or downstream demand weakens.
In 2025, the company's trading business revenue plunged 59.97% year-on-year to 1.713 billion yuan, reflecting sharply shrinking market demand. Meanwhile, accounts receivable from related parties reached 3.561 billion yuan, with only 107 million yuan in provision for bad debts. Auditors explicitly stated they could not obtain sufficient evidence to confirm recoverability.
Debt and Guarantees: Chain Reaction Risk
As of the latest announcement, cumulative overdue debts guaranteed by Sanfangxiang for its subsidiaries reached 522 million yuan, accounting for 10.82% of the latest audited net assets. For instance, its 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 provided irrevocable joint liability guarantees.
Shares held by the controlling shareholder, Sanfangxiang Group, and Jiangsu Sanfangxiang International Trade Co., Ltd., have been judicially frozen. An auction was launched in May 2026 but suspended due to objections. The risk of control change remains. Lianhe Credit downgraded the company's long-term credit rating to A- with a negative outlook in June 2026.
Policy Intervention Brings a Turnaround
Facing persistent industry losses, the government stepped in. In the second half of 2025, relevant authorities held a symposium with leading PTA and bottle chip companies to discuss industry conditions and project progress. This meeting was seen as a key signal to prevent vicious competition and stabilize the industry.
Policy effects appeared in Q1 2026: Sanfangxiang achieved a net profit of 32.7409 million yuan, turning profitable year-on-year. Additionally, geopolitical tensions in the Strait of Hormuz led to a significant rebound in polyester chain product prices, improving margins. The company's stock price temporarily moved above the 1 yuan delisting threshold.
Capacity Reduction Still Needed
Despite short-term improvement, the fundamental overcapacity issue remains unresolved. The PET bottle chip industry still faces pressure from digesting new capacity and phasing out outdated facilities. For Sanfangxiang, debt restructuring, resolving guarantee risks, and rebuilding core profitability are key to determining whether it can truly achieve a turnaround.