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Cement

Business

Bag of cement jumps to N11,000

by Folarin Kehinde
written by Folarin Kehinde

Consumers and builders across several states are groaning under the weight of fresh increases in cement prices, with a bag now selling between N10,500 and N11,000 in many parts of the country.

Market surveys conducted in Kwara, Abuja, Kano, Kaduna, Jigawa and other northern states indicate that the upward review has become widespread, cutting across major brands and leaving household builders, block makers and contractors struggling to adjust their budgets.

In Ilorin and other parts of Kwara State, cement that previously sold for around N9,300 to N9,700 per bag last month now averages between N10,500 and N10,700 depending on the brand and location.

At major building material hubs in the state capital, a bag of Dangote Cement which earlier sold for about N9,500 now goes for between N10,500 and N10,600.

Similarly, BUA Cement has risen from roughly N9,500–N9,600 to about N10,600–N10,700.

Lafarge Africa products are also being sold within the same N10,600 to N10,700 range, while Mangal Cement, which was the most affordable at about N9,300–N9,400, now sells for between N10,500 and N10,600.

Traders attribute the development to what they describe as rising supply chain costs and increased production expenses.

 

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Business

Nigerians to pay more for cement as production costs increase by 121%

by Folarin Kehinde
written by Folarin Kehinde

The combined impact of Naira depreciation and high inflation has led to a 121% increase in cement production costs, dashing hopes for lower prices.

Smuggling to neighbouring countries, where cement fetches higher prices, has also made the situation worse.

In Chad and Cameroon, a 50kg bag of cement ranges from $120 to $150.

With an exchange rate of N1,600 per dollar, this translates to N240,000 to N270,200 per bag, significantly higher than the N8,000 price in Nigeria.

Kabiru Rabiu, Group Executive Director of BUA Cement, confirmed the pressure from illegal smuggling, noting that cement is being taken across borders for higher margins.

“One of the pressures that we see is that there is a lot of illegal smuggling of export of cement to Cameroon and Chad.

“What happens is that if you take cement just across the border to some of these markets, it is selling at $150 to $270.

“That is why we realize that a lot of our cement is actually not only going to the North East but to Maiduguri in particular because there are a lot of distributors taking this cement across borders because it offers a lot of margins,” he told Vanguard.

Despite a significant revenue increase of 84.5% to N1.116 trillion in Q1’24 for leading manufacturers like Dangote Cement, Lafarge Africa, and BUA Cement, the 121% spike in production costs to N586.6 billion overshadowed profits, leading to a 4.1% decline in combined Profit Before Tax (PBT).

End users, including block moulders and builders, are also feeling the pinch.

The National Association of Block Moulders of Nigeria (NABMON) has urged the government to reduce import duties on cement components to attract foreign investment and lower prices.

The National President, NABMON, Mr Adesegun Banjoko, gave the advice, saying “the price of one bag of cement in Nigeria, currently in the region of N8,000 and N9,000 was still considered too expensive.”

Another builder in Lagos, Sikiru Ajala Enterprise, said: “The average cement price for Dangote Cement is N9,000, Lafarge N8,500 and BUA N8,000 is still very costly.

“This is the major reason why most of us builders are not building as many houses as possible. When you go to the banks for a loan they ask for 30 to 35 percent interest. How can we cope with this?”

The rising energy costs, input materials, and exchange rate volatility are major contributors to the price hike.

As the Naira weakens, input costs rise, with consumers ultimately bearing the burden.

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Headlines

Despite Cement Manufacturers Boast to Crash Price, Cement Hits N4,500

by Folarin Kehinde
written by Folarin Kehinde

Cement prices have surged by 40 per cent one year after Nigeria’s largest cement manufacturers boated of crashing cement prices in the country.

Dangote Cement and BUA Cement had locked horns in February 2021 following the increase in the price of cement.

During the period, cement prices were trading between N3,200 to N3,400. In 2020 the prices of cement went up to N4,000.

But BUA Groups Chairman, Abdulsamad Rabiu, said his company and other big industrial players were benefitting, but insisted that the country has no business with a cement price as high as N4,000.

Few days into 2022, cement prices are trading at N4,700 per bag and N4,500.

The development has triggered a surge in the overall cost of construction projects.

An Abuja based cement dealer who preferred anonymity said that both Dangote and BUA cement are trading around N4,400 and N4,500.

“Both Dangote Cement and BUA Cement are now selling for N4,500,” the cement dealer said.

Further checks revealed that in the first week of 2022, the commodity rose as high as N4,700 causing panic among developers.

Emmanuel, a cement dealer based in Abuja attributed the rise in the price of cement to several challenges such as rising cost of materials, rising prices of gas, cost of distribution, increasing cost of servicing equipment like cement plants, electricity issues and other operational impediments.

He further revealed that it has become a common practice for the price of cement to surge during the dry season because of the huge demand for the product by construction workers.

The increase in cement price is coming at a time when the Federal Government is planning fresh investments of N3.53trn in the Nigerian housing sector to reduce the deficit in the country which is estimated at about 17 million houses.

Read Also: FG Seal Fuel Station, Cement Depot in Abuja

The investments, to be made within the next four years is part of the strategies of government to boost housing delivery and guarantee affordable houses for Nigerians.
Nigeria has experienced rapid yet uncontrolled urbanisation, which put intense pressure on an already stretched housing infrastructure.

Nearly 50 percent of Nigerians currently reside in urban areas, which represents almost 100 million people.

Over the years, housing supply constraints and asymmetric information on existing housing policies have prevented Nigeria from keeping up with the rapid urbanisation rate.

Also, lack of policy continuity arising from political risk and change of government over the years have stifled government efforts thus, explaining the gap between the availability of affordable housing and the demand due to rising population.

Furthermore, the sector faces other hurdles such as proper land administration constraints; weak adherence to real estate market regulations; unhealthy speculation by stakeholders in the sector; low private sector involvement, poor housing database and mapping constraints as well as rising cost of building materials.

These challenges have all contributed to severely curtailing access to land despite the government’s best efforts to reform the mortgage sector.

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