A new report has revealed that cement prices in Nigeria will remain high in 2024.
This is despite a slash in prices from BUA cement in October 2023.
The report by investment banking firm, Cardinal Stone, titled “Nigeria Cement Rebounding from a Tumultuous Year” noted that the year 2023 was a very tough one for the cement industry in the West African powerhouse.
The firm said that the challenges were caused by the poorly executed naira redesign, which led to cash scarcity, and currency devaluation in June.
The report noted that For pricing, cement prices will continue to remain high in 2024 due to producers seeking to offset operational costs, volatility in the forex market, and high inflation.
It’s not all bad news though as it projects a rebound in the sector’s performance in 2024 based on the increased infrastructure budget for 2024 at N1.32 trillion, the creation of the Infrastructure Support Fund( ISF) by the Presidency, active implementation of the (AfCTA), increased production capacity, etc.
The report also noted that the chance of a price war between players in reaction to BUA’s price reduction in October 2023 is small but not impossible.
“Barring a potential price war between players in response to BUACEMENT’s ex-factory price slash, we maintain that average cement prices would remain elevated in Q4’23E and FY’24E as players aim to protect their margins from rising operating costs occasioned by still-high inflationary pressures and strong volatility in the foreign exchange,” It said.
The Building Collapse Prevention Guild had stated on the first day of January that the planned cement price hike would worsen the country’s economy.
The guild called on President Bola Tinubu to invite cement manufacturers for an urgent discussion to prevent the proposed increase in the price of cement.
It stated that there were feelers that cement manufacturers were planning an upward review of cement prices in early January.
It noted, “The price of ready-mix concrete will also be increased while the cost of in-situ production of concrete will rise significantly. Such an increment, if allowed to take place, will worsen the economic situation of the nation.
The Cement Producers Association of Nigeria had earlier warned that the plan by the Federal Government to introduce concrete roads would raise the price of cement to N9,000 per bag from the current price of N5,000.