…BUA gives reasons for failing to crash price to N3,500
The cement market in Nigeria has recorded relative stabilities as price of the product has moderated at an average of N7,500 per 50kg bag in the last six to eight months of this year.
Though there are protestations here and there against the major manufacturers, namely Dangote, BUA and Lafarge, for keeping the price high at that amount, making the product unaffordable and unsupportive of activities in the construction sector.
A market survey conducted recently by BusinessDay at various locations reveals that the relative price stability is driven by low demand and slowing activity at construction sites which, in turn, is caused by inflation and a weak local currency whose exchange rate is anything but stable.
Those who keep close tab on the construction industry are however, optimistic that the price stability may lead to increased construction activities as it will encourage investors to plan unlike before when nobody was sure of what the next price regime would be, as was witnessed in the second half of 2023 when the price, over night, jumped from N5,000 to N9,000; N11,000; N14,000 and more.
The survey found out that it is the same story for iron rods, also called reinforcement, as it also witnessed a price jump in the aftermath of the petrol subsidy withdrawal and the floating of the naira by the federal government.
In the two major cities of the country, Lagos and Abuja, our reporters found out that cement price has moderated at an average of N7,500 for the two major brands, Dangote and BUA cements. Whereas Dangote brand sells for N7,600 per bag in Lagos, it sells for N7,400 in Abuja.
Read also: BUA laments high energy costs, blames middlemen for high price of cement
In Lagos, BUA sells for N7,000; Lafarge for N8,200 while Purecem sells for N8,400. In Abuja, BUA which is the dominant brand in the northern part of the country sells for N7,300 per 50kg bag.
Sebastin Ovie, a cement dealer in the Ojo area of Lagos, told our reporter that most retailers stocked Dangote brand because the other brands were hard to find which explains why their prices are higher.
In Abuja, Onwuka Charles, a distributor, told our reporter that seasonal changes impact on cement sales, explaining that “during rainy season, cement sales decline compared to the dry season.”
Charles, who currently sells cement for N7,400 per bag, with discounts available for bulk purchase, highlighted the competitive strategies employed by major cement brands, particularly Dangote, which has significantly influenced market dynamics.
“Dangote’s marketing strategy, including substantial incentives, has led many distributors to favour their products over BUA Cement,” he explained, saying that these incentives include valuable items such as tricycles, which can be worth up to N2.5 million, given to distributors who exclusively sell Dangote Cement.
Meanwhile, BUA Cement does not offer similar incentives, has explained why their crash of the cement price to N3,500 per bag could not sail through.
Abdul Samad Rabiu, chairman of BUA Cement, said it was dealers who frustrated the N3, 500/bag policy of his company, explaining that while his company sold over a million tonnes of cement to dealers at N3, 500 per bag, with the intention that they would pass the benefits to end-users, the dealers sold for as high as N7000 and N8,000 per bag.
Rabiu who spoke at the company’s 8th Annual General Meeting in Abuja, said the company had to discontinue the policy as its intervention was not to subsidise dealers, noting that they could not stop the dealers whom he said made huge profits from the high margin as they had no control over prices in the open market.
Read also: Dangote Cement, others dip market by N750bn as bearish bias persists
He added that the Naira devaluation last year and the fuel subsidy removal also played roles in making the policy unsustainable. This was because these two actions by the federal government triggered hyper-inflation that is, today, affecting Nigerians and the economy negatively.
Other building materials whose prices have also moderated are iron rod, electrical wires, binding wire, nails and tiles of various categories. In Lagos, our survey reveals that a 16mm length of iron rod now sells for N20,000 as against N35,000 it sold for earlier in the year.
“12mm sells for N12, 000 per length while 10mm sells for 7.500 per length as against N18,000 and N11,500 respectively they sold for in November—December 2024,” Deji Ogunbayo, a dealer, confirmed to our reporter at Pako building material market in Isolo at the weekend.
In Abuja, it was discovered that the iron rod market was experiencing significant price fluctuations and the traders were grappling with an unsteady pricing environment with prices varying based on sizes and market conditions.
Fidelis Ikechukwu, a dealer, noted that the market was experiencing frequent price changes. “Prices vary according to size; 16mm rods are priced at N16,000, 12mm at N8,500, and 10mm at N6,500. Binding wire and nails are sold at N35,000 for 20kg each, while square pipes are available at varying prices,” he said.
