Good times will be back for private developers and prospective homeowners clamouring for a reduction in building materials’ cost, as major cement producers have slashed product prices.The reduction has already triggered a ripple effect on the open market, where prices have dropped by about 12 per cent. The new prices have slightly reduced construction cost in the sector, which have been reeling under pressure from government policies and debt burdens.
Market research revealed that the Dangote Group, which is emerging as a market leader in the cement industry, was the first to reduce prices of its Dangote brand of cement from N2,600 to N2,300 (retail price) recently.Other producers under the Cement Manufacturers Association of Nigeria (CMAN) such as Lafarge Cement followed suite. The company also slashed its prices from N2, 600 to N2, 300 in the open market. In some other locations, some retailers looking for huge profit still offer both brands product to the public between N2, 350 to N2, 500.
Senior officials of the companies could not to respond to enquiries, but many contractors and builders welcome the development. They say the government needed to exercise control over the cement industry’s operators, if it wanted the construction sector to move ahead. But the prices have gone down significantly in various locations.
Speaking on the development, a cement distributor at Ibafo, Mr. Tunde Odeh said the reduction in price was communicated to them towards the end of December but actually implementation started after the New Year celebration. According to him, although there is a reduction per bag, it has not actually affected sales because of the purchasing power of most Nigerians.
Odeh, a distributor of the two major brands, said he was told that the election fever and uncertainty led to the reduction.He said “We used to sell at the rate of N2, 600 before but it is now between N2, 350 and N2, 450 depending the brand and quantity because we still need to pay for off loading. Odeh said the reduction could help in their sales because many people are more interested on the cost of material than issue of quality because of the liquidity issues in the country
“We used to buy 100-bags before at the rate of N260, 000 in addition to the cost of transportation. We gain like N100 per bag from it aside that we will pay for our store. This situation is applicable only to Dangote cement because it is the most popular brand in the industry that builders demand for”.He stated that the price reduction affected mainly a particular popular brand in the market stressing that the need to sustain the price in order to bring back hope for improved construction in the housing sector.
Another dealer at Mowe, Mrs. Irene Aziegbe said the reduction is expected going by the economic downturns.She urged the producers to maintain the price or further reduce it because of the low patronage being witnessed in the sector now.
“The sales are still relative low. Before now, there used to be increased construction because of the dry season and we used to finish our consignments within two weeks but it is different now. When we asked some of our big customers, they stressed that bigger construction works will start after the elections because of the attendant tension and uncertainty.
Also a regional sale director of a popular brand in Lagos said the reduction was orchestrated by drop in sale and the need to maintain cash flow.
The director, who pleaded for anonymity stressed that the low sales were the major consideration especially with elections near the corner. He however, indicated a likely increase in the prices after the elections.Speaking with The Guardian, a cement distributor, Alhaji Olayiwola attributed the crash in price to the apprehension associated with the 2019 general elections.
He said market has been witnessing increased supply and lower demand for products, hence the necessity to reduce prices by major producers.Another cement dealer in Ikeja, Lagos, Mr. Sunday Ilesanmi who also confirmed the reduction from the previous price of N2, 700.00 to N2, 550.00, explained the price slash started since January.