Cement distributors challenge worth enhance in dry season regardless of relative steady costs
Cement distributors in Lagos have said that costs of the commodity may rise to ranges seen earlier within the 12 months throughout the subsequent dry season when demand will increase.
A overview of costs throughout main cement distribution retailers reveals that costs have remained steady previously 4 months following intervention from the federal authorities and the Nationwide Meeting. The worth of a 50kg bag of cement ranges from N7,500 to N8,200.
Talking on costs of the product, Ms. Halimat, a significant cement distributor in Ikorodu mentioned, “Now, we promote Elephant cement at N8,200 per bag and that’s the value for like two to a few months now. No massive distinction between the value for Dangote and Elephant Cement for a while. I feel it’s due to authorities intervention and the wet season. Usually, demand is low throughout the wet season as most building work stops.”
Ms. Halimat’s views had been confirmed by Mr. Idowu, who not solely sells cement but additionally common constructing supplies. He mentioned that though costs are steady now, they’re anticipated to rise when the dry season comes, and building work picks up.
He mentioned, “The drop in demand doesn’t solely have an effect on cement however constructing supplies on the whole however as building works start from perhaps October or November, we’ll start to see costs increases- that’s how the market normally works however the one early this 12 months was stunning and surprising. I’ve been on this enterprise for nearly 20 years and I’ve not seen such a fast enhance in cement costs. We now have learnt now.”
N8,000 cement costs will not be nonetheless low cost
Nevertheless, one other cement vendor, Mr Enuwa disagreed that diminished demand for cement was because of the wet season. In accordance with him, diminished demand was attributable to a rise in costs past the attain of common folks to embark on massive scale tasks.
He mentioned, “N8,000 for 50kg of cement is just not low cost and that’s not a steady worth. How many individuals can construct a home or any challenge at that worth? We had been promoting cement round N5000 per bag this time final 12 months and it elevated to round N12,000 however dropping to the present worth, that’s not steady.”
He defined that the excessive costs of cement may deter builders from constructing on the common full scale anticipated throughout the dry seasons.
Talking on the cement worth projection for the dry season, an official of the Dangote Group who requested anonymity mentioned there isn’t any purpose to consider the opinions of cement distributors on the projected worth enhance.
In accordance with him, costs are decided by various factors, not solely demand, and it’s troublesome to challenge with certainty any enhance in costs.
In his phrases, “What the distributors are telling you is what they assume. It doesn’t imply it should occur. I can not say for sure what is going to occur to cement costs when the dry season comes. It is dependent upon various factors, and now we have no management over some.”
Cement worth enhance earlier within the 12 months
In February 2024, Nairametrics reported a spike within the worth of cement from round N5,000 for 50kg bag to over N10,000 sending panic waves throughout the development business. It took the intervention of the federal authorities to rein on producers that noticed costs drop to N8000 after deliberations between the federal authorities led by Minister of Works led by Sen. David Umahi.
Previous to the hike, analysts at Cardinal Stone had projected that cement costs in 2024 would stay excessive because of the elevated inflationary surroundings, volatility within the overseas change market and excessive operational value.
Nigerian companies haven’t had it good with the overseas change market in 2024. The naira began the 12 months buying and selling at below N1000/$ and closed the primary quarter at N1309/$ regardless of exchanging for as excessive as N1600 on the official window throughout the quarter.
The Cardinal report then diminished the probability of a worth battle between business gamers in response to BUA’s worth discount in October 2023, stating that whereas it’s slim, it’s not inconceivable. It’s value understanding that in October 2023, the Chairman of BUA Group, Abdulsamad Rabiu said his cement firm will peg the value of cement at N3,500. The declaration proved to be mere lip service as neither builders nor distributors had been capable of purchase at that worth.
Impression of cement worth enhance on the housing sector
As hinted earlier by Mr. Enuwa, the cement distributor, the influence of the excessive cement costs may deter builders from beginning new tasks.
An earlier report by Nairametrics revealed that the 130% enhance in constructing supplies has stalled housing tasks throughout the nation with builders most hit because of the decline in jobs.
Moreover, the rise in constructing supplies like cement has negatively impacted the actual property sector as builders face losses over an unprecedented enhance in the price of constructing supplies which impacts your complete actual property improvement sector.
