Cement Prices drop to N7,500 in 6 Months Due to slow construction activities

The cement market in Nigeria has seen relative stability, with prices moderating at an average of N7,500 per 50kg bag over the past six to eight months. Despite criticisms directed at major manufacturers like Dangote, BUA, and Lafarge for maintaining prices at this level—making cement less affordable and hindering construction sector activities—this price point has remained steady.

A recent market survey across various locations indicates that this stability is largely due to low demand and a slowdown in construction activities, which have been affected by inflation and an unstable local currency exchange rate.

Industry observers are optimistic that this price stability could encourage increased construction activities, allowing investors to plan with more certainty. This is a marked contrast to the volatility seen in the second half of 2023, when cement prices surged dramatically from N5,000 to as high as N14,000 per bag.

The survey also revealed similar trends for iron rods, also known as reinforcement, which experienced a price hike following the removal of fuel subsidies and the federal government's decision to float the naira.

In Nigeria's two major cities, Lagos and Abuja, cement prices have settled at an average of N7,500 for the leading brands, Dangote and BUA. In Lagos, Dangote cement sells for N7,600 per bag, while in Abuja, it goes for N7,400. BUA sells for N7,000 in Lagos and N7,300 in Abuja, with Lafarge and Purecem selling at slightly higher prices.

In Lagos, a cement dealer, Sebastin Ovie, mentioned that Dangote cement is more commonly stocked due to supply challenges with other brands, contributing to their higher prices. In Abuja, distributor Onwuka Charles noted that seasonal changes also affect cement sales, with lower demand during the rainy season.

Charles, who sells cement at N7,400 per bag with discounts for bulk purchases, highlighted the impact of competitive strategies, particularly those employed by Dangote. The company offers substantial incentives to distributors, such as tricycles valued at up to N2.5 million, for exclusive sales of Dangote Cement. This strategy has made it difficult for BUA's price reduction efforts to succeed.

BUA Cement's chairman, Abdul Samad Rabiu, attributed the failure of their N3,500 per bag policy to dealer actions, as they sold cement at much higher prices, negating the intended benefit for consumers. He also cited the naira devaluation and fuel subsidy removal as factors that made the policy unsustainable, leading to widespread inflation affecting the economy.

Prices for other building materials, such as iron rods, electrical wires, binding wire, nails, and tiles, have also moderated. In Lagos, a 16mm iron rod now sells for N20,000, down from N35,000 earlier in the year. Similar price drops have been observed for 12mm and 10mm rods. In Abuja, iron rod prices continue to fluctuate, with traders facing an unstable market environment.

Dealer Fidelis Ikechukwu noted that prices vary by size, with 16mm rods priced at N16,000, 12mm at N8,500, and 10mm at N6,500. Binding wire and nails are sold at N35,000 for 20kg each, while square pipes are available at varying prices.