Two Months After Price Reduction, Experts Speak on Why BUA Cement Continues to Sell Above N5,000/Bag
- BUA cement continues to sell above N5,000 even after the announcement that the company slashed the price
- Analysts have attributed the reason to the high transport expenses driven by the removal of fuel subsidies
- This is according to a survey across different markets in SouthWest, East, and other cities in the country
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
Following the announcement of a reduction in the ex-factory price to N3,500 in October, retailers are still selling a bag of BUA cement at the previous market price, defying the expectations of builders and other consumers.
Source: UGC
Legit.ng earlier reported that marketers were selling the price of BUA cement above N5,000 a few days after the announcement.
According to recent findings, a 50kg bag of BUA cement costs, on average, N5,500 in the marketplaces.
This is attributable to several factors, including the increase in transit expenses brought on by eliminating subsidies.
BUA cement price across markets
According to BusinessDay's research, several regions of the nation still sell the product at the previous pricing.
Major distributors in the Nyanya neighbourhood of Abuja stated that the price cut had not taken effect and that the BUA and Dangote brands were still available at the previous rates.
Distributors in Port Harcourt were found to be out of Bua stock, but the Dangote brand, which was accessible, was dominating the market with sales of N5,600.
Benin City marketers stated they had yet to see the BUA-announced revised price take effect, with the commodity still selling between N4,500 and N5,500.
In the East, which is supposed to be part of BUA's catchment markets, the product is either out of stock or too expensive for consumers.
The commodity was absent from all eight of the markets in Lagos, South West Nigeria, which were surveyed in four different locations: Adeniji Adele in Lagos Island, Ketu in Ojo, Ikotun-Egbe in Alimosho, and Suru Alaba in Ajeromi Ifelodun.
A Festac Town dealer said he was still selling at the previous price despite having old stock.
How analysts are reacting to this
According to Mustapha Umaru, an industry expert and equity research analyst at CSL Stockbrokers Limited, the anticipated price drop has yet to be apparent because retailers have factored in transportation expenses, particularly in light of the loss of subsidies.
Umaru said:
“Considering the substantial transportation expenses arising from the high fuel cost due to the removal of subsidy, retailers are factoring these into their prices. As a result, the effect on retail prices is expected to be minimal.”
The effect of the price cut on BUA cement may be noticeable in the northern areas, where the product is more readily available, according to Abigail Alabi, a research analyst at Vetiva Capital Management Limited.
Alabi said:
“The impact of the price reduction may be noticeable in northern regions where BUA cement has a more extensive presence. However, in other regions, the effect might not have materialized yet due to the limited reach of BUA.”
BUA set to open new multi-billion naira cement plant in Sokoto after price crash
Legit.ng reported that one of Nigeria's top cement producers, BUA Cement, owned by Abdul Samad Rabiu, revealed plans to inaugurate a new cement plant in Sokoto state in January 2024.
Rabiu, chairman of BUA Group, revealed this during his visit to Sokoto state Governor Ahamd Aliyu on Wednesday, November 1, 2023.
Rabiu told the governor that he had told President Bola Tinubu about the planned inauguration of the new plant during his visit to the latter on Tuesday, October 31, 2023.
PAY ATTENTION: Unlock the best of Legit.ng on Pinterest! Subscribe now and get your daily inspiration!
Source: Legit.ng
