In an attempt to boost cement consumption, Africa’s largest producer of the building material, Dangote Cement, has cut prices of cement in its home market in Nigeria.
CEO of Dangote Cement, Onne van der Weijde, said in Lagos that the price cuts to its 3X cement brand by N6,000 ($30.23) per metric tonne, translating to N300 reduction per 50kg bag, and allows Dangote to still achieve strong returns.
A survey across the country revealed that distributors and retailers are beginning to implement the new price regime, resulting in gradual decline in the price of cement across the country.
The claim of price reduction was corroborated by retailers, including Opeloyeru Eniola in Ojodu area of Lagos State, who said: “Although I am still selling this old stock, I am aware that the price for the next supply has been reduced.”
While analysts believe that the on-going African operation expansion must have given Dangote cement a leeway to bring down domestic price of the product, the cement giant is also reportedly hoping the lower prices will help increase export sales to neighbouring nations where it has no presence yet.
Team head, Chapel Denham, Tajudeen Ibrahim, had in reaction to the reports of price reduction by Dangote Cement said: “We expect the other cement producers such as WAPCO, UNICEM and AshakaCem in the Lafarge Africa Group and Cement Company of Northern Nigeria, to cut cement prices, being price-takers in the industry.
The sales volumes of the cement industry may however not rise on the back of the price cut, as the relationship between price and consumption is weak,” said Ibrahim.
“Competition has no choice but to bring down the price because Dangote is the market leader,” said Pabina Yinkere, head of research at Lagos-based Vetiva Capital Management.