Cement Giants Dangote, BUA, Lafarge Explain Why Prices Won't Drop Below N7,000
- Cement manufacturers have revealed the reason prices of cement suddenly skyrocketed in the last few weeks
- They listed challenges such as import duties, poor road infrastructure, and forex rates as the reasons for the hike
- They added that the significant gap between demand and supply has significantly contributed to the price surge
Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.
Cement manufacturers have attributed the abrupt rise in commodity prices nationwide to a significant surge in operational expenses.
The disclosure followed a meeting between the cement manufacturers and the federal government in Abuja on Monday, February 19, 2024.
It would be recalled that in the last few weeks, Nigerians have been lamenting how cement prices across brands and markets suddenly increased.
Source: UGC
On the manufacturers' side were representatives from Dangote Cement Plc, BUA Cement Plc, and Lafarge Africa Plc.
The meeting was chaired by the minister of works, David Umahi and supported by Doris Uzoka-Anite, the minister of industry, trade, and investment.
Legit.ng reported that an agreement was reached to reduce the product's price range from N9,000 to N15,000 per 50kg to a new range of between N7,000 and N8,000, varying by location, on a nationwide scale.
Manufacturers highlight reasons for cement price hikes
Following an extensive three-hour discussion, the manufacturers elucidated the factors contributing to the recent substantial price hike.
Kabir Rabiu, the executive director of BUA, underscored challenges such as exorbitant gas costs, import duties, poor road infrastructure, and the persistent high foreign exchange rate against the naira, which hinder an immediate reduction in the commodity's price.
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Rabiu said:
“First, our cost component of energy went from 39 per cent to 60 per cent because of gas
“The price of gas last year was 415, then to N715, today we are paying more than N1,500. All these issues were discussed and we gave our commitment.
“When our 6 million tonnes of cement is supplied to the market in the few weeks, definitely we will see a sharp drop in prices when that volume hits the market”.
Gap between demand and supply
According to The Nation, Rabiu mentioned that the significant gap between demand and supply has significantly contributed to the price surge, particularly considering the current season.
He elaborated that certain manufacturing plants are encountering issues that hinder their production capacity, deliberately or inadvertently, resulting in decreased overall production.
He added:
“And being the highest period of cement demand in the country, the tendency that demand will outstrip supply will push the price up.”
Arvind Pathak, the group managing director/chief executive officer of Dangote Cement Plc, emphasised that despite the local sourcing of the commodity's core materials, factors such as spare parts, among others, are subject to import duties and foreign exchange fluctuations.
He said these economic factors pose challenges for the manufacturers, making it challenging to ignore the current economic conditions.
Builders ask FG to slash cement price
In related news, Legit.ng reported that the Lagos chapter of the Nigerian Institute of Building called on the federal government to intervene and lower the cement price in the country.
The institute stated this at a briefing in Lagos state ahead of its 32nd builders conference tagged "Safe and Sustainable Building Production Management."
They attributed the skyrocketing cement prices to poor foreign exchange, adding that this had taken a toll on producers.
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Source: Legit.ng
