Cement prices hit N6,000 per bag in Nigeria

Cement distributors nationwide have implemented fresh increases in cement prices and related products, citing the impact of high inflation on the building materials market.

Dealers and retailers were taken aback by the sudden price changes, alleging that they were not provided with any prior notice. Over the weekend, many of them rushed to stock up on inventory in anticipation of further price hikes.

Nigeria’s inflation rate rose to 22.4 percent in May, surpassing the upper band of the Central Bank’s target range of 6.0-9.0 percent. The soaring inflation has rendered most building materials unaffordable, eroding the purchasing power of aspiring homeowners.

The construction of modern housing in Nigeria heavily relies on cement, as it remains a crucial component for durable and robust buildings. Cement constitutes approximately 40 percent of the estimated building costs.

Currently, three major producers dominate Nigeria’s cement market. BUA controls 17.6 percent, Dangote holds 60.6 percent, and Lafarge accounts for 21.8 percent, allegedly limiting competition and deterring potential players from entering the market.

Despite the abundance of raw materials required for cement production in the country, the price of cement has been steadily rising over the years, exceeding affordable price ranges.

Nigeria possesses ample reserves of limestone, marl, calcite, shale, and gypsum. Limestone deposits can be found in various states, including Abia, Akwa Ibom, Anambra, Bayelsa, Benue, Borno, Cross River, Enugu, Imo, Nasarawa, Ogun, and Sokoto. Additionally, the country is home to around a billion tonnes of gypsum deposits spread across Yobe, Adamawa, Bayelsa, and Anambra.

Industry experts expressed concerns last week that the latest price hike could deal a severe blow to an already stagnant industry, considering the pivotal role cement plays in all aspects of construction.

According to market research conducted by The Guardian, the prices of building materials have surged by over 70 percent between last year and July 2023. In Lagos, Ogun, Ondo, and Abuja, a 50-kilogram bag of cement now sells between N4,900 and N6,000. In some areas, the price ranges from N4,750 to N4,800.

Reacting to the price increase, block makers have adjusted their prices as well, charging between N360 and N390 for 6-inch vibrated blocks and between N440 and N480 for 9-inch vibrated blocks.

Opinions vary regarding the cause of the price hike. While some retailers attribute it to increased logistics and haulage costs resulting from the removal of fuel subsidies, dealers attribute it to a rise in factory prices set by the producers.

Kate Janet, a seller in Lafuwape, Ogun State, expressed surprise at the sudden price change, stating that the reasons behind it remain unclear. Previously, cement producers had blamed high production costs, rising freight charges, and expensive power for the instability in cement prices.

“The recent increase in fuel prices has further compounded the impact on housing production, transportation costs, and product distribution throughout the country,” she added.

Another dealer in Ikeja, Lagos, who chose to remain anonymous, highlighted the increased demands of workers involved in unloading cement trucks. These workers, citing the high cost of living, are demanding higher pay for their services. Consequently, dealers are forced to incorporate these additional logistics costs into the product prices to ensure profitability.

Clement Achibong, a cement dealer in Akoka, Lagos, revealed that the price of cement surged by N150 within a week. Previously sold at N4,850, a 50-kilogram bag now sells at N5,000. Although the recent price adjustment is attributed to cement factories, the exact reason behind the sudden change has not been officially disclosed.

While speculation suggests a potential link between the surge in cement prices and the recent removal of fuel subsidies, no official statement has been released by the producers regarding the matter, according to Achibong.