Cement distributors in Lagos anticipate that the prices of cement may rise during the upcoming dry season when demand typically increases.
A review of prices at major cement distribution outlets shows that cement prices have remained stable for the past four months. This stability is attributed to interventions by the federal government and the National Assembly. Currently, a 50kg bag of cement is priced between N7,500 and N8,200.
Ms. Halimat, a major cement distributor in Ikorodu, shared that Elephant cement has been selling at N8,200 per bag for the past two to three months. She noted, “There hasn’t been a significant price difference between Dangote and Elephant Cement lately, likely due to government intervention and the rainy season. Demand usually drops during the rainy season as most construction work halts.”
Mr. Idowu, another cement distributor and seller of general building materials, corroborated this view. He mentioned that while prices are stable now, they are expected to rise with the onset of the dry season and an increase in construction activities. He stated, “The current low demand affects not just cement but all building materials. As construction picks up around October or November, we usually see price increases. The surge earlier this year was unprecedented. In my 20 years in this business, I haven’t seen such a rapid price hike. We’ve learned from it.”
However, Mr. Enuwa, another cement seller, disagreed with the notion that reduced demand is solely due to the rainy season. He argued that high prices have deterred people from undertaking large-scale projects. He said, “N8,000 for a 50kg bag of cement isn’t affordable, and that’s not a stable price. Last year, we sold cement for around N5,000 per bag, which shot up to about N12,000 before dropping to the current price. This fluctuation isn’t stability.”
An official from the Dangote Group, who requested anonymity, downplayed the predictions of price increases by distributors. He explained that prices are influenced by various factors, not just demand, making it difficult to predict with certainty. He remarked, “What distributors say are just their opinions. It doesn’t guarantee that prices will rise. Several factors play a role in determining prices, many of which are beyond our control.”
Earlier this year, in February 2024, Nairametrics reported a significant spike in cement prices from around N5,000 to over N10,000 per 50kg bag, causing widespread concern in the construction industry. The federal government intervened, leading to a price reduction to N8,000 after discussions led by the Minister of Works, Senator David Umahi. Before this spike, analysts at Cardinal Stone had predicted that cement prices would remain high in 2024 due to inflation, foreign exchange volatility, and high operational costs.
Nigerian businesses have struggled with the foreign exchange market in 2024. The naira began the year trading under N1000/$ and closed the first quarter at N1309/$, despite reaching as high as N1600 on the official market during the quarter. The Cardinal report also suggested that a price war among industry players in response to BUA’s price reduction in October 2023 was unlikely but not impossible. In October 2023, BUA Group’s Chairman, Abdulsamad Rabiu, claimed his company would cap cement prices at N3,500. However, this price was not accessible to developers or distributors.
High cement prices have significant impacts on the housing sector. Mr. Enuwa mentioned that elevated prices could discourage developers from starting new projects. A previous report by Nairametrics highlighted that a 130% increase in building materials has stalled housing projects nationwide, significantly affecting builders due to reduced job opportunities. Additionally, the rising cost of building materials, including cement, has negatively impacted the real estate sector, leading to losses for developers and affecting the entire industry.
For more updates, join our WhatsApp channel: [https://whatsapp.com/channel/0029VabITrvEAKW7DSkTfP0JC](https://whatsapp.com/channel/0029VabITrvEAKW7DSkTfP0JC).