human economy, there is an irreversible ultimate law that runs through all times: all additive economies with incremental expansion will eventually move towards subtractive economies with stock contraction.
This is not the fluctuation of the industry cycle, not the rise and fall of the short-term market, but the inevitable result of the evolution of all industries after the maturity of industrialization. No economy or industry can escape the whole process from incremental growth, windfall profit expansion to overcapacity, value decline, profit compression and stock clearance.
First, there is no eternal high-tech industry, only the continuous precipitation of traditional industries
in the market economy, there is no eternal high-tech track.
Any emerging industry, high-tech, in the early stage of technological breakthrough and capacity scarcity, has extremely high technical barriers, product barriers and profit barriers, belongs to the incremental dividend industry, enjoys high premium, high growth rate and high return, and belongs to the typical "additive economy".
However, as long as a technology is fully mature, the process is thoroughly popularized, the production capacity is rapidly enlarged, and the talents are fully diffused, the high-tech attributes will disappear immediately.
The once high-tech industry will quickly lose its scarcity value and transform into a traditional industry with standardization, homogenization, full competition and overcapacity. The real logic of
industrial iteration is always constant:
old high-tech industries continue to sink into traditional industries, and new high-tech industries continue to be born and iterated.
Today's new energy, AI, photovoltaic, energy storage, the future will inevitably repeat the path of cement, steel, glass and other industries, from the blue sea to the red sea.
Technology is temporary, but tradition is eternal.
This subtractive economic law applies to the vast majority of fully competitive industries in the whole society. Only a few special industries with state franchise control, resource monopoly and strict regulation of production capacity can jump out of the complete market-oriented involution, the most representative of which is the coal industry. Relying on the monopoly attribute of resources and the total amount control of policies, the coal industry can maintain the relative stability of supply and demand and profits for a long time, and avoid the collapse of the value of complete marketization. Except for monopolistic industries such as coal, all fully competitive real industries will eventually enter the subtractive economic cycle.
Second, the agricultural era and the industrial era are two completely opposite crisis logics
. Marx's definition of the essence of the economic crisis is the core key to understand the current "subtraction economy". The crisis of
agricultural civilization is the crisis of shortage. In
the agricultural era, the productivity was weak, the output was limited, and the population growth and natural disasters directly caused the shortage of materials and food. All social and economic contradictions come from insufficient production and supply, which is a "crisis of insufficient use". The crisis of
industrial civilization is the crisis of surplus.
Industrialization brings unlimited production capacity of scale, mechanization and replication. The biggest problem of industrial society is no longer that it can not be made, but that it is too much, too much capacity and excess supply.
At present, all fully competitive traditional industries, such as building materials, cement, steel and glass, continue to fall in price, volume and profit,
which is not the disappearance of demand at all, but the systemic excess crisis brought about by the extreme capacity of industrialization.
Third, the essence of the subtraction economy: the systematic contraction of the continuous decline in value. The core characteristics of the crisis
surplus era are very clear:
product surplus → price continued to decline → industry value continued to depreciate.
In this irreversible subtraction cycle, all participants in the entire industry will suffer systemic losses at the same time:
First, capital owners will face large-scale asset depreciation.
In the era of additive economy, plant, equipment, production capacity and inventory are all value-added assets;
in the era of subtractive economy, they all become depreciating assets. The more over
capacity, the lower the price of products, the lower the rate of return on fixed assets, the shrinking of enterprise assets, the decline of valuation and the loss of investment have become the norm.
Second, industry enterprises have entered a permanent profit contraction and clearing cycle.
Product prices have been lower than reasonable profit range for a long time, a large number of enterprises have small profits, losses, stagnation, the industry no longer has the overall profit-making effect, can only continue to reduce production, limit production, and clear backward production capacity.
Third, the income of employees in the industry is declining, the welfare is shrinking, and the employment risk is rising. The scale of the
industry has peaked and fallen, and enterprises continue to reduce costs, which directly leads to the reduction of jobs, the stagnation of wages, the decrease of income and the decline of employment stability.
Traditional industry practitioners have changed from an income-increasing group in the incremental era to a pressure-bearing group in the subtraction era.
In short,
the additive economy is to make the cake bigger and increase the value of the whole staff;
the subtractive economy is to make the cake shrink and the value shrink again.
Fourth, the stability of total social wealth, GDP and people's livelihood must be based on the stability
of traditional industries. In the current economic cognition, there is a great misunderstanding
that emerging high-tech can replace traditional industries, stimulate the economy and support people's livelihood.
The fact is completely the opposite:
the stability of a country's total social value must be based on the stability of the value of traditional industries. The sustained stability of
a country's GDP must be based on the basic stability of the GDP of traditional industries. The stable income, employment and welfare of workers in the
whole society must be based on the stable treatment of employees in traditional industries.
Emerging industries are characterized by fast iteration, large fluctuations, fast substitution, high concentration, limited employment absorption, and dividends concentrated only in a small number of enterprises and groups.
Traditional industries carry the country's largest industrial chassis, the largest employment group, the largest tax base, and the largest volume of real assets.
If traditional industries continue to appear:
asset depreciation, profit collapse, tax decline, income decline, employment contraction,
only rely on a few high-tech industries to create dividends, the whole society's GDP, finance, people's livelihood, consumption will continue to weaken. The healthy structure of the
economy is by no means "a few high-tech industries eat meat, and the vast majority of traditional industries shrink". The
real steady-state economy is that
emerging industries are responsible for incremental innovation, while traditional industries are responsible for stock underpinning.
5. Subtractive economy
of the cement industry The cement industry is a typical traditional industry with full competition, no monopoly protection and no policy price support. It fully demonstrates the whole process of the subtractive economy falling from the peak, overcapacity, value collapse and industry restructuring. It is also the epitome of all market-oriented traditional industries in the future.
(1) Cement demand has been declining permanently for a long time, and the total industry volume has entered a deep subtraction cycle
. China's cement industry has completely bid farewell to the incremental era and entered the ultimate subtraction channel where demand continues to shrink.
China's cement consumption has reached a historical peak of more than 2.4 billion tons. With the end of urbanization, the reduction of infrastructure increment and the replacement of new construction by stock transformation, the total demand for cement will continue to decline step by step in the future.The long-term ultimate trend of
the industry is very clear:
the annual consumption of cement in China will gradually drop from the peak of 2.4 billion tons to less than 1 billion tons, and the steady state will even shrink to 700 million tons. Halving the
demand and halving the total amount is the irreversible trend of the cement industry in the next 20 years, and also the logic of the bottom of the cement subtraction economy.
(2) The raw material structure was completely reconstructed, and the volume
of limestone-based cement was greatly reduced by replacing cement with solid waste. While the total amount was reduced, the product structure of the cement industry was also undergoing subversive changes.
Industrial solid waste, steel slag, slag, phosphogypsum, fly ash and other solid waste alternative raw materials, Replacement future production of low carbon cement by replacing natural limestone with industrial waste, The volume of solid waste-based cementitious materials will continue to expand, and the steady-state scale will reach 300 million tons per year.
This means
that in the total consumption of 700 million tons of cement in China in the future, there will be only about 400 million tons of clinker-based cement produced with traditional limestone and limestone as the core raw materials.
Traditional cement production capacity with high energy consumption and high limestone consumption will be permanently withdrawn from the market.
At present, the total production capacity of clinker supporting cement in China is close to 3 billion tons, and the stock capacity is extremely large. Under the background of the sharp decline in demand, the utilization rate of production capacity will enter a historic low.
According to the real demand of 400 million tons of effective traditional cement in the future,
the overall capacity utilization rate of the national compliance clinker production line of more than 300,000 tons will be reduced to less than 20% on average;
In Northeast China, North China and other regions where traditional production capacity is concentrated and demand is shrinking fastest, the capacity utilization rate will fall below 15%.
Ultra-high capacity, ultra-low load, ultra-long idle and ultra-high frequency production reduction will become the long-term norm of the cement industry.
(4) Ultra-low capacity utilization rate triggered a sharp rise in cost rigidity, and the whole industry entered a systematic deep loss
. The biggest crisis in the cement industry is not the reduction in demand, but the rigid rise in fixed costs brought about by low-load operation.
The depreciation of production line, bank loan interest, fixed labor and plant management costs will not be reduced with the reduction of output under
the condition of continuous involution of the industry, no shutdown of production, no reduction of production lines and share competition. After the
capacity utilization rate drops to 20%,
the depreciation, interest and fixed labor amortization will rise by more than 100 yuan/ton per ton of cement;
the cost of coal fuel will be maintained at nearly 100 yuan/ton;
In addition, there are other fixed costs such as accessories, power consumption, transportation, environmental protection, operation and maintenance.
The cost is more than 250 yuan and the price is about 170 yuan, resulting in a permanent rigid loss of 780 yuan per ton. The
future loss of the cement industry is not a cyclical loss, but a structural, institutional and permanent loss.
(5) We must abandon the old idea of off-peak production and rely on the independent choice of market players to move towards active subtraction
. A long-term popular industry idea needs to be re-examined: off-peak production can only be a short-term expedient measure and should not be used as a long-term solution. This way has obvious game color, often "hanging the sheep's head of the wrong peak, selling the dog meat of the inner roll". Enterprises tend to calculate each other for immediate interests, and do not really face the objective fact that the market capacity has been shrinking for a long time. If we stay on the temporary solution of peak staggering, as demand continues to decline, capital will continue to be consumed, and eventually many enterprises, including some large groups, will be dragged down.
The industry needs to update its thinking: do not hope to "maintain" the old pattern by means of short-term adjustment. Faced with the reality of long-term market contraction, the only way out is to take the road of subtractive economy: through the merger and reorganization of the market itself, large enterprises continuously improve the industry concentration in the competition, spontaneously and actively reduce excess capacity, gradually find a new balance between production and marketing between the shrinking supply and the shrinking market, so that the value of products can be restored. This is the process that the main body of the market has to face and complete.
(VI) The industry fate of large enterprises: If they do not take the initiative to subtract, they will eventually die the most tragically
. At present, the domestic large groups with cement as the main industry are the main body with the heaviest stock assets, the largest production capacity and the highest liabilities in the industry, as well as the group with the greatest risk and the highest cost in the future subtraction economy.
If large cement groups can not recognize the long-term trend, actively comply with the logic of subtraction, blindly stick to the huge stock of production capacity, passively involved in the endless market involution, they are likely to lose the most in the long run. Continuous low-price competition and low operating rate will continue to erode the value of assets and consume their own capital. The heavy assets and liabilities of large enterprises will be magnified in the downward cycle, and the pressure of operation will become greater and greater. The core dilemma of
large enterprises comes from the serious surplus of the industry as a whole. Even if they intend to explore new directions such as solid waste utilization, it is difficult for them to completely transform and replace the existing clinker business; as long as the huge stock capacity of the whole society is not digested through market clearing, the involution will not stop, and no one can be alone. Transformation path of
small and medium-sized enterprises: from traditional clinker production to solid waste cementitious materials
Compared with large heavy asset groups, single-line and double-line small and medium-sized cement enterprises have more flexible adjustment space.
Under the trend of big subtraction, small and medium-sized enterprises can take the initiative to choose transformation: moderately break away from the traditional clinker track, take the comprehensive utilization of industrial waste as the development direction, develop and produce new cementitious materials with low limestone consumption and high solid waste blending, and use steel slag, slag, phosphogypsum, fly ash and other resources to open up differentiated space. This subdivision area is also difficult for large enterprises to fully cover.
(8) Trap of international expansion: overseas addition will eventually return to global subtraction
. Now some cement enterprises have invested overseas and gained some short-term profits. However, if we carefully calculate the return per ton, the benefits of overseas business are not as prominent as we imagined. What is
more alarming is a misunderstanding of thinking: simply regarding going to sea as "finding a new additive economy". If the excess production mode is exported in disorder, it is easy to copy the domestic volume to the international market, triggering global capacity competition, and the overseas profit space will disappear rapidly. In the long run, the world's basic building materials industry will also experience peak demand, overcapacity, and eventually move towards a subtractive economy, with no permanent overseas increments. Replacing transformation with expansion is also not a long-term solution.
(IX) Ultimate survival logic
of the cement industry In general, the general direction of the cement industry is clear: the incremental era is over, and it is difficult to maintain the old balance by relying on various short-term measures. The real test comes from the long-term subtraction process. There is no shortcut for
the industry: rely on the market to promote mergers and reorganizations, improve concentration, and make the choice of contraction or transformation by various market players according to their own conditions; large enterprises see the long-term risks and do not blindly stick to the old production capacity; qualified small and medium-sized enterprises explore the path of solid waste-based new materials; We should take a rational view of internationalization, reject the illusion of "forever increment", and seek a new balance between supply and demand and value in the objective environment of declining market capacity.
Only by respecting the objective law of subtraction economy and actively adapting to the stock era, can cement industry stabilize its industrial base and achieve long-term and sustainable development.
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