Commodities

Cement prices drop on increased supply as clinker shortage subsides

cemnt

Cement consumption grew 18 percent in the half year ended June, driven by increased construction activities in the private sector. FILE PHOTO | NMG

Retail cement prices have retreated in the past month after hitting a high of between Sh800 and Sh1,000 per 50-kg bag in March on improved supply from factories whose clinker shortage has eased.

The cost of cement, alongside that of other building materials, had shot up significantly in the first quarter of this year, saddling developers with higher costs which saw some pause projects due to budget overruns.

The higher costs were partly due to global supply chain constraints due to pent up demand catching up with the market after the Covid-19 pandemic and the Russia-Ukraine war that raised the cost of coal, which is used to make clinker.

Traders who spoke to the Business Daily said the price of a bag of cement is now retailing at between Sh650 and Sh680, with some traders offering the product for as low as Sh630.

“Before the elections, the prices were high but after the electioneering period, the price has gone down. People used to hike the price due to shortages,” said Ms Grace Waweru, a hardware operator in Kawangware, Nairobi County.

Production of cement has outpaced consumption over the years, helping to tame prices. There has also been increased competition in the market due to entry of new players, while the export market, which used to take up the excess production, is also narrowing as more countries in the region set up their own production plants.

Data from the Kenya National Bureau of Statistics (KNBS) shows consumption of cement grew 18 percent in the half year ended June, owing to increased construction activities in the private sector that defied the surge in cement prices in the first quarter of the year.

The KNBS data shows that 4.97 million tonnes of cement were used in the period compared to 4.06 million tonnes consumed in a similar period last year.

With the drop in cement prices, consumption is expected to increase in the last half of the year.

This is a relief for developers who had stalled some construction activities in the last two years due to the Covid-19 pandemic restrictions, the war in Ukraine and expensive import prices for inputs.

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