Cement prices remain stable despite weak naira

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Bags of Cement

With the tension created in the business environment by the general elections and the devaluation of the naira, many had expected the prices of cement to rise, but have remained stable, MAUREEN IHUA-MADUENYI writes

The prices of cement have remained stable in the past two months. This may have come as a surprise to industry operators and economic analysts as prices of other commodities, including other building materials, have risen following the devaluation of the local currency and the announcement of austerity measures by the Federal Government.

A market survey of cement price on Friday by our correspondent revealed that a 50 kilogramme bag of the commodity was sold at a wholesale price of N1,850 and N1,870 for the Elephant and Dangote brands, respectively; while retailers sold it at N1,900 or N1,950, depending on a buyer’s bargaining power and location of the seller.

At the end of 2014, a 50kg bag of cement was sold at N2,000 after an attempt to reduce the price by one of the major industry players, Dangote Cement, had failed.

Dangote Cement had announced that the 50 kg bag would be selling for N1,000. The price of the higher 42.5 grade was pegged at N1,150 per bag, exclusive of Value Added Tax, representing about 40 per cent cut on the prevailing market price of N1,700 across the country at the time.

Following the announcement of the slash, the prices of major brands including Dangote 3x and Lafarge Elephant cement dropped to N1,500 at the retail market and N1,400 at the wholesale shops. The prices of the 50kg bag also fell from N1,700 to N1650 and N1600 for retail and wholesale prices, respectively.

But the prices went up again after Dangote Cement Plc announced a new price regime of N1,700 from its factories and this prompted some retailers to raise the cost to N2,100 per bag.

Findings by our correspondent on Friday showed the prices of the product had remained almost the same in most parts of the country.

For instance, in the Abule-Egba area of Lagos State, where many distributors are located, a distributor of both Dangote and Elephant brands of the product, who craved anonymity, said the price stability started around February after it oscillated between N2,000 and N2,100 at the retail market.

According to him, only Dangote Cement has added about N20 to its factory price, which explains why a bag is sold for N1,870 as against Elephant Cement’s price of N1,850.

The distributor added that prices might also change slightly for those buying in large quantities such as 20 bags and above.

“People will not patronise anyone who sells at a high price now because there is no money in the circulation and I think the manufacturers are aware of this,” another distributor, Mr. Adewale Farotimi, told our correspondent.

He recalled a bag of cement was sold for N2,000 between December and January because the demand for the product was high as many people were either starting construction projects or rushing to complete those they had started earlier in the year.

“Patronage is still normal now but it was better during the dry season when people were doing more construction work. Now, the rains are here; people are no longer building as much as they were then because of the rain,” he said.

A retailer who told our correspondent that she sells the product currently at N1,900, said sellers were not expecting any price hike except the manufacturers decided to surprise them.

Another retailer, who gave his name simply as Hakeem, also operating a block making factory beside his cement shop, told our correspondent that even if the prices were much better at N1, 700 at which it sold in mid-2014, those who deal in the product are happy that there is stability.

He said, “A lot of people expected the prices to rise much more than what we are selling now with the naira devaluation. If you check, you will find out that the prices of other consumer products have gone up but cement has remained relatively stable.

“Though we know it may not last for a long time, maybe after the elections, the manufacturers may surprise us a little but we are enjoying the stability while it lasts.”

Although none of the major players such as the Dangote Cement and Lafarge Africa was willing to confirm if there were any plans to increase the prices of the commodity, there are indications that the price regime may not last beyond the first quarter of the year.

According to a report by Bloomberg News, the Country Chief Financial Officer, Lafarge Africa, Mr. Anders Kristiansson, has predicted that cement prices may rise later in the year after the slump in the economy.

Kristiansson who noted the status of the local currency would affect the price of cement hinted of possible price increase from mid-2015.

The President of the Building Collapse Prevention Guild, Mr. Kunle Awobodu, commenting on the situation in an interview with our correspondent, said there had always been calls for a stable price of cement or an outright reduction as part of efforts to boost growth in the building and construction sector.

“The paper we presented to the National Assembly in respect of cement standard and price was based on the fact that we have not been able to decide whether cement causes building collapse but we are aware that because of its (high) price, people try to economise on it and that has been affecting the quality of concrete produced with cement as well as block,” he said.