The cement market, in the last couple of weeks, has seen a significant turnaround with prices tumbling from between N10,000 and N15,000 per 50kg bag to between N7,000 and N8,000.
The sudden rise in the prices of cement and other major building materials in February this year introduced upsets in the construction industry, especially in real estate, where many developers were forced to abandon building sites.
A recent market survey conducted by BusinessDay in different locations across the country confirmed a price drop, ranging between N7,000 and N7,500 per bag, though BUA cement is selling for N7,500 to N7,800 per 50kg bag, depending on location.
Both retailers and major distributors who spoke to BusinessDay explained that the price drop is due to low demand and government’s intervention. At the peak of the price hike, the federal government called a meeting with major producers where it was agreed that a bag of cement should sell for N7,000 to N8,000, depending on location.
But the producers did not comply with this agreement immediately. “Nigerians stopped demanding for cement; many project sites were abandoned as developers sat back and waited for the prices to come down. So, what has happened is an inter-play of demand and supply with price responding which is Economics at work,” Collins Okpala, a cement dealer, told our correspondent in Abuja.
In the Nyanya area of the Federal Capital Territory, a 50-kg bag of Dangote cement now sells for between N7,000 and N7,500, while BUA cement sells for between N8,500 and N9,500, down from between N11,000 and N12,000 respectively.
In Lagos, the product has seen significant price drop too. In Ojo area of the state, Sebastin Ovie, a dealer, told our reporter that what has happened is a crash from the January price, attributing the crash to low demand and stronger naira.
“The current price of the product is between N7,000 and N7,500 per 50kg bag, depending on the brand. This is a significant drop from the average of N12,000 which most dealers were selling in February and March,” he said.
A dealer in Agege area of the state who identified himself as Taofik Olateju, told our reporter that sales are picking up due to the drop in price. He recalled that Nigerians at a point stopped buying due to the high price of the product at N15,000 per bag.
“I am sure most dealers ran at a loss then because we had mainly old stocks which we wanted to offload quickly,” he said, confirming that the product sells for between N7,500 and N8,000, depending on the brand and the demand for the brand.
Continuing, Olateju noted that “because the naira is now doing well against the dollar, it will be unreasonable for manufacturers to continue to sell the product at the old prices. I also believe that the federal government’s intervention and the threat to license more importers may have worked, leading to the reduction in price,” he stressed.
In Enugu, our correspondent reports that the product sells for between N7,200 and N7,500 depending on the brand and location. “This is a city where the price of a 50kg bag went for as high as N12,000 and N13,000 in some cases in February and March,” Samuel Chikwendu said.
He added that the prices of other building materials, especially iron rods, have also dropped considerably which is why, he said, activities are picking up again at construction sites.
The story is slightly different in Owerri, the capital of Imo State, where Innocent Okonkwo told our reporter that low demand was also driving the price drop, adding that a 50kg bag was selling for N9,000 on the average in the state.
Sundry market observers are optimistic of further price reductions, but they remain cautious as manufacturers, wholesalers, and retailers continue to play critical roles in setting prices for end-users.
They lament, however, that despite Nigeria’s status as one of the largest producers of cement in Africa, the price of the product continues to rise, particularly in the face of high inflation impacting the building materials market generally.
Okpala in Abuja highlighted the variations arising from direct sourcing from manufacturers versus procurement through dealers, with traders holding old stocks selling products at prices ranging from N8,500, N8,300 to N8,000 per bag.
Lucy Nwachukwu, another dealer in Abuja, pointed out the significance of procurement volume in determining cement costs, noting that stability in prices has been observed over the past month, with the product retailing for between N7,000 and N7,800 depending on the brand.
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Kabir Rabiu, the Group Executive Director of BUA Group, in an interview on Aries TV, emphasized the commitment of manufacturers to prioritize the needs of Nigerian consumers, stressing the importance of addressing the role of middlemen in the pricing equation.
It should be noted, however, that the collective efforts of manufacturers, wholesalers, retailers, and governmental bodies remain imperative in ensuring continued affordability and accessibility of cement for all Nigerians.