Cement industry: One hundred years of agitation, who master ups and downs

1. The cement industry relies on urbanization, and long-term demand is expected to level off

1.1. Worldwide: Cement demand is related to the degree of economic development

The development of human civilization begins with the transmission of wisdom, and the transmission of wisdom depends on organized social tribes. In today's society, materials, information and energy are the three pillars of human civilization, and materials are the cornerstone of building a city, where people live. Among them, cement is not only the most used material in human construction, but also the most consumed material in the world. According to the Portland Cement Association (PCA), cement is widely used in all aspects of our urban life and transportation, such as housing construction, roads and Bridges, and municipal facilities, and the scale of cement demand is closely related to urbanization.

According to the statistics of CRH, the world's largest building materials company, the proportion of cement, aggregate, concrete, asphalt and other building decoration materials in the field of new buildings and refurbished and repaired buildings has changed slightly in recent years (not considering the impact of the subprime mortgage crisis in 2007-10), and the market share of the maintenance field has slowly increased to 50%. Considering that Europe and the United States account for 49% of the company's sales, after the completion of regional urbanization (the urbanization rate in Europe and the United States exceeds 70%, including France and the United States, the urbanization rate exceeds 75%), the demand for housing, infrastructure and other market maintenance and renovation areas will increase or the main reason.

1.2. Focus on the United States: The overall demand for cement in the later stage of urbanization is flat

Since the Civil War, the American economy has been virtually untouched by the trauma of war. As the world's most developed economy, the complete development process of urbanization in the United States needs our in-depth study. We take the speed of urbanization rate in the United States as the basis for division, and based on this, the development of infrastructure investment and upstream cement industry is deeply discussed.

The process of urbanization is accompanied by the rapid development of fixed assets and real estate investment. Considering the economic inflation factors in 1930 and 1950's, this paper uses the physical index of fixed asset investment excluding price factors as the analysis base. Due to the US government's vigorous development of infrastructure investment during the Great Depression, we divided the US fixed asset investment into three stages. Before 1960, the average growth rate of US fixed asset investment reached a peak of 5.75%. On the one hand, the government led large-scale investment in infrastructure, and on the other hand, the rapid improvement of urbanization increased the demand for infrastructure and housing. Since 1960, the growth rate of infrastructure investment and real estate investment has narrowed under the condition of declining urbanization growth rate, and the periods of fast growth are mainly concentrated in 1965-1985 and 1993-2000, which are basically consistent with the two stages after urbanization.

From the perspective of citizens' clothing, food, housing and transportation, the growth of urban population and the expansion of urban scale have increased the scale of municipal facilities such as roads, hospitals, water supply and drainage. Taking the scale of government investment in highway and street construction in the United States as an example, large-scale investment in highway and street construction occurred during 1900-1930, 1946-1967 and 1985-2000 respectively, which coincided with the rapid growth of urbanization rate in the United States. The investment process is similar in other areas such as hospitals, water supply and drainage. In the process of urbanization, the increasing demand of new citizens for housing and public facilities has promoted the growth of the consumption of building materials such as cement and steel.

Cement demand is highly correlated with infrastructure and real estate investment, and weak demand in the post-urbanization phase is inevitable, but it will be stable in the long run. With the advancement of urbanization, the level of cement demand in the United States has risen; With the gradual completion of urbanization, the per capita cement demand scale began to fluctuate in a narrow range, which can be roughly maintained around the center of 330kg. Even after the subprime crisis of 2008, the recovery of the economy has revived demand for cement near this hub. We believe that the urbanization rate of the United States has been close to 80% in the 1990s, and the weak demand for cement after urbanization is inevitable; Considering that there is a large reconstruction and renovation demand in downstream markets such as infrastructure, real estate and municipal, the demand for cement is expected to be maintained at a relatively balanced level for a long time, which is more consistent with the per capita consumption of mainstream developed countries in the world.