Cement industry poised to maintain high prices in 2024-Report

Business a.m

A new report from Cardinal Stone, a leading investment bank in Nigeria, predicts that cement prices in the country will remain high in 2024 due to increased government focus on infrastructure and construction projects. 

The Cardinal Stone report, titled “Nigeria Cement Rebounding from a Tumultuous Year,” noted that the increased budget allocations for critical sectors and ambitious infrastructure initiatives are likely to boost demand for cement, leading to a resurgence in the industry.

The report  stated that cement manufacturers are responding to the expected increase in demand by increasing production capacity and improving efficiency. It further noted that challenges remain for cement manufacturers, such as high inflation, limited infrastructure and power supply, and the threat of more disruptions in gas supply. However, the report remains optimistic about the overall outlook for the industry, with potential opportunities for growth as the economy recovers. 

The report considered the possibility of a price war among cement manufacturers, but concluded that it was unlikely to occur in 2024. Instead, it projected that cement prices would remain high in 2024 

It stated, “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.” 

Cardinal Stone highlighted that rising operating costs and high inflation will be the key factors driving manufacturers to maintain high prices in the year ahead. It also noted that volatility in foreign exchange rates could impact cement prices, as manufacturers may need to factor in the cost of imported raw materials.