The price of cement has risen 20 percent in the retail market.
This is the first price hike after it had recently declined in an unprecedented manner putting a stop to the continuous price hike experienced for the past decade.
When the new cement giant Derba Midroc Cement (DMC) joined the business about two months ago, the price of other factories product had significantly declined.
In the past two months, the maximum price of cement has declined to 225 birr per quintal, which was previously over 300 birr.
While DMC announced that it started selling a quintal of cement for 153 birr (excluding VAT), other cement factories had reduced their retailing price to a little over 200 birr per quintal. Even if the local industries did not decrease their price as low as DMC, their discount has been significant in comparison with the previous year’s prices.
However, since the end of the past week, the price of cement excluding Derba’s product has gone up to 280 birr in the retailer markets of Addis Ababa.
Cement market operators said that they did not have any information for the reason as to why the price hike has occurred again. But they speculate that one of the biggest cement factories, the state owned Mugher Cement, who completed its huge expansion recently, has closed its industry for maintenance. “The production cut of Mugher would be the factor for the price hike because it is one of the major cement suppliers on the market,” a retailer at Megenagna cement market told Capital. He said that other factories’ product has also risen in the past ten days.
‘The factory was closed for maintenances last week. That is why the retailers capitalized on the incidence,’ argued factory officials.
Cement, one of the major inputs for the construction industry, has been an obstacle for the sector over the past decade. Following governmental and private construction investment in the sector, a surplus demand occurred in tandem with the pace of development in the country.
Currently DMC supplies up to 400 quintal of cement for interested buyers using its own transportation system, which is new for the sector. But retailers said DMC’s product is not highly anticipated in the market despite the fact that the company offers large discount when compared with others. “The product newness is the main reason. It may take a few months until clients verify the product quality,” retailers said.
According to the same retailers, currently DMC’s product is mainly supplied for clients that have large construction projects. Quality wise, they reckon, Mugher is a favorite for customers more than any other products, but other new cement factories have entered the market and clients will try and test these products.
To solve the shortage the government has been importing huge amounts of cement for its own and private projects. But since DMC entered the market and the completion of Mugher’s expansion project, the government has cut its imports. A surplus was noticeable in the market when new industries started production. Some of them have even contemplated export markets in the continent.