Dangote Cement’s announcement of price cuts on its 3X brand in Nigeria has led to media speculation over the impact on market competition. The N300 price cut per 50 kg bag of cement is reportedly starting to be implemented across the country, bringing prices down gradually.
The expectation is that other manufacturers will have to follow suit and cut cement prices, though some have suggested that this may not result in an upswing in consumption, which Dangote had said was the reason behind the price cut. Low oil prices and the threat from insurgents in the north of Nigeria have had an impact on investment in the country.
Nigeria’s major cement companies reported a strong start to the year, with cumulative net profit of Dangote, Lafarge, Ashaka and Cement Company of Northern Nigeria up 24%. Both Dangote Cement and BUA Group have announced capacity expansion plans in the country. BUA said that it hoped by doubling capacity it would raise its market share to about 20%. Dangote’s market share is said to be about 70% based on output, with almost 30 million t capacity. Lafarge, with 8 million t, is the country’s second largest producer.
Dangote had lowered prices last November, but was forced to raise them again shortly thereafter to protect profits. It has been suggested that if the naira is devalued again, cement prices will have to go back up to protect margins.
Edited from various sources by Katherine Guenioui
Read the article online at: https://www.worldcement.com/africa-middle-east/14092015/dangote-cement-price-cut-sparks-competition-speculation-544/