October 15, 2021

Cement prices defy seasonal trend, rubbishes producers’ claims

Cement prices defy seasonal trend, rubbishes producers’ claims

*COVID-19 forced manufacturing capacity down by 50%—Distributor

*Prices skyrocket since #EndSARS protest

*Transportation, offloading, others push retail prices

*Availability determines retail price — Dealers

*Umuahia,  Kano record lower prices

By Kingsley Adegboye

Price of cement has taken a further spike in the month of July to August contrary to the usual trend in the industry.

Vanguard’s market findings indicated that the average market price is now about N3,800, a 31 per cent rise against average N2,900 recorded in May.

In the first quarter of 2021, Q1’21, the price of this commodity considered most essential in the housing and construction sector of the economy, had attracted huge controversies over pricing games between key competitors as the prices rose significantly.

READ ALSO: Why cement prices are going up — Dangote

Industry observers had expected that with the wave of denials, accusations and counter-accusations amongst the producers, the prices would moderate downwards or stablise at the average of N2,900.

However, the market trend report indicated that in June the price rose to between N3,200 and N3,350. In July, the price jumped to N3,600 and jumped again in August, now hovers around N3,800.

Dealers told Vanguard that typically the price of cement falls in May remaining moderate up till October, explaining that there is usually a lull in building and construction activities during rainy season, which leads to less demand for cement.

Banjo Adekola, a cement distributor, who spoke to Vanguard, attributed the rising prices to various factors ranging from logistics such as transportation from the factory to off-loading at distributors’ warehouses.

He explained that the associated costs incurred in the distribution chain are added to the actual factory price, a situation which puts pressure on the retail price.

In Taraba State, the predominant brand of cement sold across every local government area is Dangote products.

Vanguard’s findings revealed that only few distributors had other brands in their stores. Majority of those who had other brands outside Dangote products are major distributors, who offload trucks weekly.

Some other brands on sale in Jalingo, the state capital are Ashaka and Supaset cement.

Vanguard’s investigation also revealed that these two other brands are relatively cheaper than Dangote brands.

According to one of the dealers, who gave his name as Bishop, cement business is not anchored on a fixed price, noting that product availability determines the price of the product.

Across Taraba State, there are three major brands of Dangote cement, which are Blockmaster, Falcon and 3x.

Prices of these brands also differ in various local governments in the state. In Jalingo, the state capital, the current price of Dangote products in all stores visited ranges from N3,300 to N3,500.

On the Mambilla Plateau in Sardauna local government, the price of cement is N4,000. Same is the case in Karim-Lamido.

One of the dealers in Jalingo who preferred anonymity, explained that the prices of cement late last year and early this year were between N4,000 to N4,200 across the state capital.

He said prior to the #EndSars protests, they were selling cement products for N2,700 but the prices after the #EndSars soared from N2,700 to N3,200 and subsequently to N3,500 and N4,000.

In Oyo state, the hike in the price of cement varies from one local government to another and from one dealer to another, which has triggered a ripple effect in popular markets, with prices going up by about 20 per cent.

For instance in Ibadan, the Oyo State capital, the price of Dangote cement has risen from N2,300 to N3,500 and N3,600 (as the price ranges from dealer to dealer).

Similarly, the price of Dangote cement rose to N3, 500 as at August from N2,700 earlier this year, while the price of Lafarge cement is now between N3,300 and N3,400.

Confirming the development to Vanguard, a cement dealer in Bodija market, Alhaji Fasasi Aderounmu, said the price of Dangote cement is now going for N3,600.

He said the price has persisted for a month. The product, he said, was sold at the rate of N3,100 and N3,300 early June before it was increased to N3,500 and N3,600 last month.

According to him, there was scarcity of the product in the open market, which fuelled the demand pressure.

He said: “With the high cost, the dealers don’t even see the product to buy from the manufacturers. We don’t understand the situation.

“What we learned is that there was an increase by one of the manufacturers. I think that caused the problem.”

Another dealer, Ramota Adebisi, said there was no communication of the latest price development from the manufacturers.

‘Supply is limited

A major distributor at Jericho, Ibadan, Alhaji Abdulateef Agboke, said the middle men, often complained that they could not get products for weeks and they had to hike the prices when they got very limited quantity, without understanding that the manufacturers have not increased the price.

According to him, the COVID-19 pandemic forced manufacturers to reduce output to almost half due to delay in getting raw materials from abroad.

In Umuahia, Abia State, a bag of cement sells for between N3,200 and N3,300.

Investigation by Vanguard revealed that a bag of Unicem brand sells for N3,200 while Dangote and Supa Set respectively sell for N3,300 per bag.

Exceptions to the rule

Amidst the general complaint of upward price pressure, a cement dealer at the New Timber Shed Market, Umuahia, who simply identified himself as Mr. Chibuike, said the price of the commodity had slightly come down from where it was few months ago.

According to him, cement has been previously sold for between N3,400 and N3,500 depending on the brand.

He attributed the reduction in price to the rainy season, saying the price is expected to go up again as the dry season sets in.

Chibuike explained that usually price of cement comes down during wet season as people do not normally embark on building projects during the rains but wait till dry season.

“This is the lowest the prices can come. Very soon it will begin to go up again because as Christmas is approaching people will have more need for cement,” he said.

Chibuike further attributed the high cost of cement to increase in transportation fare and the general information, which has affected other factors of production and distribution.

In Kano, the price per bag of cement, depending on the brand, is now lower than it was in the first quarter of the year.

“The retail price of a 50kg bag of BUA Cement is N3,350 while that of Dangote Cement is N3,300.

One of the dealers of cement in Kano Alhaji Sanusi Mai Siminti, explained that sale of the product is determined by availability of it in the market.

He said: “The cement market has no specific time at which the prices go up or go down. It can go up at any time and can go down at any time.

“Usually, it is determined by supply and demand of the product. Currently the price of a bag of cement is N3,270 from the dealers while the retail price is N3,350.

“This is the price for BUA cement as we get it. Dangote Cement is N3,230 from depot and is sold at N3,300 by dealers.”

In Kaduna, a dealer, Mr. Ibrahim Ismail, said the price of cement is not always fixed, adding that there is always fluctuation in cement prices.

Commenting on the seasonal range of the prices of cement, he said “generally it is not about season, the fluctuation can come any time.”

A lady dealer who craved for anonymity, said “We are selling Dangote at N3,400 and Bua for N3,500.The difference is N100.”

On whether she sells other brands ,she said “ we are selling other brands ,but it depends on the one buyers prefer more. Like we have Sokoto Cement, and it is N3,500 too per bag.

“The market is good during the dry season. During the rainy season, it is low.”

Vanguard News Nigeria