Prices of BUA, Dangote, Other Cement Brands Rise in Nigeria, Sell Higher in Neighbouring Countries
- Cement manufacturers have lamented the rise in production costs, which might lead to higher prices
- The companies said many factors, such as high energy costs and smuggling, pose a threat to the cement selling cheaper in Nigeria
- Findings show that cement prices in neighbouring countries such as Chad and Cameroon sell for as high as N270,000 per 50kg bag
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The effects of naira devaluation and high inflation have caused a 121% increase in cement production cost, which analysts say might trigger higher prices in Nigeria.
Cement manufacturers have said smuggling is rising in Nigeria, hampering the chances of selling cheaper products.
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Cement prices sell higher in neighbouring countries
The manufacturers say the product's price is higher in neighbouring countries than in Nigeria.
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In neighbouring countries such as Chad and Cameroon, cement costs between $120 and $150 per 50kg bag.
At an exchange rate of N1,600 per dollar, the average price of the product is between N240,000 and N270,000 per 50kg bag, higher than the N8,000 it sells in Nigeria.
Vanguard reports that BUA Cement’s Chief Executive Director, Kabiru Rabiu, said one of the pressures facing cement manufacturers in Nigeria is the illegal smuggling of the product to neighbouring countries.
He said smugglers sell the product across the border for $150 to $270 per bag.
He said the companies realised that a lot of the cement going to the North is mainly meant for smuggling because the companies have many distributors in that region.
Production costs rise
A breakdown of the top three cement manufacturers' financials shows a profit decline due to rising production costs.
The firms include Dangote Cement, BUA Cement, and Lafarge Africa.
The companies posted a combined revenue of N1.116 trillion in the first quarter of 2024, representing an 84.5% increase from the N604.9 billion recorded in the same period in 2023.
The revenue growth was, however, dimmed by a 121% increase in production costs to N586.6 billion in the first quarter of the year from N264.9 billion in the same period last year.
Due to rising costs, the firms' combined pre-tax profit dipped by 4.1% to N196.4 billion from N204.8 billion.
Kabiru said that production and mining costs are more than 30%, and it is the only local material, but that energy costs are about 40 to 50% and are denominated chiefly in dollars.
He said gas prices used to operate the plants have increased, saying that the exchange rate also adds to manufacturers' pressure.
Another player enters the market
Legit.ng earlier reported that another manufacturer, Mangal Cement, recently entered the market, promising users relief.
The company said it will begin producing about 400 tonnes of the product daily, which might lead to further price crashes.
Mangal Cement sends message to Nigerians over N6,000 price
Legit.ng previously reported that. Mangal Cement has issued a public statement regarding the cost of its cement product, which is circulating on social media.
The company, owned by Katsina-born billionaire Dahiru Mangal, started production in its newly built plant in Kogi state.
The plant can produce 6,000 tons per day of cement, and Nigerians were excited that its entry into the Nigerian cement market would help lower prices.
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Source: Legit.ng
