Cement distributors in Lagos predict that prices may escalate to earlier yearly highs in the upcoming dry season as demand surges.
A survey of major cement distribution outlets indicates that prices have stabilized over the last four months due to interventions by the federal government and the National Assembly. Currently, a 50kg bag of cement is priced between N7,500 and N8,200.
Speaking on prices of the product, Ms. Halimat, a major cement distributor in Ikorodu said, “Now, we sell Elephant cement at N8,200 per bag and that’s the price for like two to three months now. No big difference between the price for Dangote and Elephant Cement for some time. I think it’s because of government intervention and the rainy season. Normally, demand is low during the rainy season as most construction work stops.”
Ms. Halimat’s observations were echoed by Mr. Idowu, a seller of cement and various building materials. He noted that while prices are currently stable, they are anticipated to increase with the arrival of the dry season and the consequent surge in construction activities.
He said, “The drop in demand does not only affect cement but building materials in general but as construction works begin from maybe October or November, we’ll begin to see prices increases- that is how the market usually works but the one early this year was shocking and unexpected. I have been in this business for almost 20 years and I’ve not seen such a quick increase in cement prices. We have learnt now.”
However, another cement seller, Mr. Enuwa, disagreed that the reduced demand for cement was due to the rainy season. He argued that the decline in demand resulted from a price increase, which made it unaffordable for the average person to undertake large-scale projects.
He said, “N8,000 for 50kg of cement is not cheap and that is not a stable price. How many people can build a house or any project at that price? We were selling cement around N5000 per bag this time last year and it increased to around N12,000 but dropping to the current price, that is not stable.”
He noted that the elevated cost of cement could discourage developers from constructing at the usual scale anticipated in the dry seasons.
Regarding the cement price forecast for the dry season, an anonymous Dangote Group official stated that the views of cement distributors regarding the expected price hike should not be taken as fact.
He emphasized that prices are influenced by various factors, not just demand, making it challenging to predict any price increases with certainty.
In his words, “What the distributors are telling you is what they think. It doesn’t mean it will happen. I cannot say for certain what will happen to cement prices when the dry season comes. It depends on different factors, and we have no control over some.”
As Mr. Enuwa, the cement distributor, previously suggested, the surge in cement prices might discourage developers from initiating new projects.
A report by Nairametrics earlier indicated that a 130% hike in the cost of building materials has caused a halt in housing projects nationwide, significantly affecting builders due to job reductions.
Moreover, the rise in the price of building materials, such as cement, has adversely affected the real estate sector, with developers incurring losses due to the unexpected surge in construction costs, influencing the entire real estate development industry.
