Business & Finance

Nigerian Cement Prices Hit N7,000 per Bag Amid Industry Challenges

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The Nigerian cement industry is grappling with a significant price hike, with the retail cost of cement soaring from N5,000 in December 2023 to a range of N6,500 to N7,000 per bag by February 9, 2024. Investigations reveal that members of the Cement Manufacturers Association of Nigeria (CMAN) have collectively raised prices by over N1,000 per bag, impacting both construction professionals and consumers.

In the Lagos and Southwest region, retail prices have jumped from N5,000 to N6,200 or higher, while the Southeast and Abuja now witness prices at N6,500 or above. This surge has rippled into related sectors, with sandcrete block prices increasing from N450 to N500 for a six-inch block, and nine-inch blocks rising from N550 to N600 each. The knock-on effect extends to ready-mix concrete and in-situ concrete production costs, posing potential challenges to new home prices, rents, and overall maintenance expenses.

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The Nigerian cement industry, dominated by key players like Dangote Cement Plc, Lafarge Africa Plc, and BUA Group, is attributing this price hike to infrastructure challenges. Issues such as inadequate transportation networks and an unreliable power supply compound operational costs for cement producers.

A report by Cardinal Stone titled ‘Nigeria Cement Rebounding from a Tumultuous Year’ projects that cement prices will remain high in 2024 due to factors such as offsetting operational costs, forex market volatility, and persistently high inflation. Despite the challenges faced in 2023, the report anticipates a sector rebound in 2024, citing an increased infrastructure budget, the creation of the Infrastructure Support Fund (ISF), active implementation of the African Continental Free Trade Area (AfCTA), and heightened production capacity.

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Stakeholders, including Mr. Adebayo Adeleke of Lancelot Group and Dr. Muda Yusuf of the Centre for the Promotion of Private Enterprise (CPPE), emphasize the critical role of cement in Nigeria’s economic development. However, they express concerns about the widening gap between local production and demand, contributing to the daily increase in cement prices.

Dr. Yusuf suggests addressing macroeconomic challenges, including high inflation, a depreciating exchange rate, liquidity issues in the forex market, and soaring energy costs, as potential solutions. Better liquidity in the forex market, a stronger naira, and local production of petroleum products are highlighted as essential measures to mitigate the rising costs in the construction industry.

Source: Leadership NG

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