In 2025, China's cement output will drop to 1.693 billion tons, a 16-year low; the clinker capacity utilization rate is only 48%, which means that more than half of the production lines are idle; The industry profit is less than 30 billion yuan, which is more than 84% smaller than peak of 186.7 billion yuan in 2019.
When demand continues to shrink at an annual rate of 6% to 10%, the cement industry is experiencing an irreversible structural downturn. The script of this downturn has already been played out over and over again in overseas markets.
International experience: halving demand is the "common destiny"
of the cement industry. Looking at the world's major economies, the cement industry has always followed a cold cyclical law: in the stage of economic take-off, infrastructure and real estate broke out, and the demand for cement soared; When the urbanization rate breaks through the range of 65% to 85%, the economic development mode shifts from incremental expansion to stock optimization, and the demand for cement turns down irreversibly. The depth of demand decline and the length of the downward cycle are far beyond the imagination of most practitioners.
Japan is the "standard sample" of this rule. In 1990, Japan's cement production reached a historical peak of 86.29 million tons, when the urbanization rate had reached 77%, and the economic bubble burst became a turning point. Over the next three decades, Japan's cement demand has been declining, falling to 34.58 million tons by 2023, with a cumulative decline of up to 60%.
From the supply side, Japan's cement industry has experienced three stages of painful liquidation: from 1984 to 1990, the policy guided the elimination of 30 million tons of backward production capacity, and the production capacity dropped by 31%; From 1994 to 1998, leading enterprises such as Onoda and Chichibu, Sumitomo and Osaka, Ube and Mitsubishi merged one after another, and the industry concentration jumped from less than 60% to 80%; since 1998, the oligarchs led by Pacific Cement have taken the initiative to cut production capacity, and the production capacity has dropped by another 48%. After three rounds of liquidation in
30 years, the number of cement enterprises has been reduced from 24 to 16, the number of factories has been reduced from 41 to 27, and the number of cement kilns has been reduced from 81 to 56, which has barely stabilized the capacity utilization rate and industry profits. From 1991 to 1994, Japan "went backwards" because of the short-term demand rebound, and the suspension of capacity reduction led to a rise in capacity instead of a fall, and the operating profit margin dropped rapidly from 16.4% to 2.6%. The
lesson is profound: in a downward cycle, any expansion of capacity based on the illusion of a short-term recovery will be repaid at an even more crushing cost. The trajectory of the
United States is equally shocking. From 2005 to 2006, the per capita consumption of cement in the United States reached a historical peak of about 0.43 tons, and the urbanization rate stabilized at 80%. After the outbreak of the subprime mortgage crisis in 2008, the demand for cement fell by 45%. Although it has recovered in the next decade, the per capita consumption in 2023 is only 84% of the peak, and it has not been able to return to the high point. The experience of
European countries is surprisingly consistent. German cement demand peaked at 42 million tons in 1972 and has now fallen to about 27 million tons; France peaked at 32.47 million tons in 1974 and now has only about 18 million tons; Italy peaked at 47.5 million tons in 2007 and has fallen to 21.5 million tons in 2014.
From the perspective of each country, when the demand for cement falls the most, the decline is generally around 50%-whether the urbanization rate at the peak is 65% or 85%, whether the economic structure is biased towards manufacturing or service industries, this line is like an iron law in front of all economies that have gone through a complete cycle. Where is the "cliff" of
Chinese cement?
Compared with the international law, China's cement industry has completed the first stage of the downward cycle-but far from the end.
China's cement demand reached a historical peak of 2.476 billion tons in 2014, when the per capita annual consumption was about 1.82 tons, and the urbanization rate was 54.77%. Considering the statistical deviation of a large number of floating population, the actual urbanization rate may be close to or even more than 65%. Since then, the contradiction of excess capacity has begun to accumulate, but it has been temporarily covered up by the real estate and infrastructure boom from 2016 to 2021. The
real turning point came in 2022, when cement demand entered a clear downward path and accelerated for four consecutive years, with production shrinking by 31.6% from its peak in 2025. According to the historical average of 25% overseas in five years, China's downward speed is not more moderate, but faster . What is
more worrying is that the downward ceiling of China's cement industry may be lower than that of Japan.
Japan's urbanization rate reached 76% in 1975, and cement demand continued to run at a high level for 15 years before peaking; China's urbanization process has slowed down significantly, real estate has completely shifted from the incremental era to the stock era-the new construction area has continued to shrink substantially, and the real estate as the largest downstream of cement in the past decade has changed from a driving engine to a drag factor. In terms of
infrastructure, the space for traditional heavy consumption projects such as "Tiegongji" is narrowed, and the cement consumption intensity per unit investment is much lower than in the past, with the investment structure dominated by old renovation, urban renewal and new infrastructure.
Comprehensive judgment shows that by 2030, China's cement demand will probably drop to 1 billion to 1.2 billion tons, 50% to 60% lower than peak in 2014, and per capita consumption will drop from 1.82 tons to less than 0.8 tons, which coincides perfectly with the historical curve of Japan and Europe.
However, the demand has come to the eve of the waist cut line, but the adjustment of the supply side is far from keeping up .
In 2025, the utilization rate of clinker production capacity is only 48%, which means that more than half of the kilns are "basking in the sun", but the actual action of capacity removal is minimal. Capacity replacement policy seems to be doing "subtraction", the actual effect is that the reduction of replacement is to squeeze out the water of ineffective capacity which has been idle for many years, and the scale of real operation capacity has not been substantially reduced. Staggered production, as an emergency production adjustment tool, can alleviate the contradiction between supply and demand in the short term, but the stopped kilns can be re-ignited at any time-essentially, it is to exchange space for time, rather than real sense of capacity clearance. It has been more than ten years since the issuance of Document No.46 issued by the General Office of the State Council
in 2016. The document calls for exploring the joint establishment of special funds for industrial restructuring by large backbone cement enterprises and flat glass enterprises in accordance with the principle of who benefits and who pays, which is dedicated to rewarding and subsidizing the production capacity that voluntarily withdraws. In the interpretation of the competent authorities, it is clearly stated that the specific charging standards and fund management measures shall be formulated by the provincial governments under the guidance of local enterprises. As for the Opinions, it is clearly proposed to carry out pilot projects in places where conditions permit. In the next step, the Ministry of Industry and Information Technology will work with relevant departments to guide the Northeast region, where the market is relatively independent and highly motivated, to carry out pilot projects for the transformation of cement production capacity. At the same time, it will also guide the areas where the market is relatively closed and working conditions are available to promote the work of eliminating excess capacity. No province has explored the establishment of a special fund for industrial restructuring, which is dedicated to the specific measures of rewarding and subsidizing the voluntary withdrawal of production capacity, but the most effective implementation is the comprehensive implementation of peak-staggering production, and there are not a few 200 + N provinces and regions.
More importantly, the concentration of TOP10 in China's cement industry is only 57%, while that in Japan has exceeded 80% and that in Germany has reached 93%. Low concentration means that no enterprise has the ability to take the initiative to cut production capacity, and every participant is waiting for others to cut first and stick to the last minute-this is the classic "prisoner's dilemma", the result is that no one cuts, and everyone dies together.
Japan's experience has proved that in the downward cycle, capacity removal can not rely on "waiting for the wind". Only after the strong intervention of the policy in 1984 did Japan really start to remove production capacity, and only after the completion of the merger and reorganization in 1994 did Japan have the organizational basis to take the initiative to remove production capacity. The current position of
China's cement industry is roughly equivalent to that of Japan in the early 1980s-overcapacity has been seriously exposed, but there is no effective policy tool and industry cooperation mechanism to promote large-scale liquidation. China's unique challenge is that the speed of demand decline may be faster than Japan's, the capacity stock brought by the size of the economy is larger than Japan's, and the degree of regional market fragmentation is higher-the triple pressure superposition means that the pain of China's cement industry from "surplus" to "liquidation" may be more intense than Japan's. The periodicity of the
cement industry, in the final analysis, is the epitome of an economy from the construction period to the operation period. It took
Japan 30 years to go from peak to trough, France and Germany 50 years to complete the same journey, and China may be speeding up the road that others have traveled. This is not a pessimistic prediction, but an objective law. Admitting that the cycle is irreversible is the premise of surviving in the cycle-those enterprises that are still fantasizing that "demand will come back" and waiting for "others to fall first" will eventually be run over by the iron law of the cycle. There is only one proposition left to the industry: whether to take the initiative to seek change or to go out passively.
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