It’s easy to ignore what’s quietly brewing in Ghana’s construction space. A few months ago, many were surprised when cement prices shot up. Retailers started adding about Ghs 9 per bag around late February, and in Takoradi, prices jumped by an eye-watering 40% between January and May, climbing from Ghs 80 to Ghs 120 a bag, according to DailyGuide Network.
Now, thankfully, prices have dropped for a few weeks and it feels like they may continue to fall. But behind the scenes, several pressures are steadily building, and together they hint at a possible reversal in the lowering trend of cement prices.
First is the increasing global price and scarcity of clinker, driven by growing demand in the Mediterranean Basin. Ghana felt the impact of these geopolitical forces in April when rebuilding efforts in the Middle East disrupted supply chains, leading to clinker cement shortages across West Africa, which manufacturers have not fully recovered from. Now, while conflicts have slowed in Syria, Iran, and Israel, the massive rebuilding efforts required in these regions, along with looming demand in Gaza, are contributing to driving up global clinker prices to about $65 per ton, up from $53 at the start of the year, according to S&P Global Commodity Insights.
Then there is the demurrage on imported goods due to delays at Tema Harbour. Importers report that vessels are waiting longer at anchorage before offloading. Reports from various sources indicate that these delays are adding hundreds of thousands of Dollars in demurrage fees each extra week the vessels delay, which pile onto the cost of clinker. When you add those port penalties to already elevated prices, the cumulative push on cost becomes hard to mask for long.
At the same time, recent increases in electricity tariffs are biting. Electricity tariffs have gone up 2.5% in May and 14.8% in July. Cement making is energy-intensive, and every increase in power charges feeds straight into production costs. Manufacturers generally absorb these costs for only so long before passing them along to customers.
And don’t overlook the foreign exchange equation. While the Ghana Cedi’s impressive appreciation brought us a lot of joy, Dollars are hard to find in the market. With companies struggling to access forex, the real cost of raw materials is being pushed upward. So even with the cedi strengthening against the dollar these past few months, the lack of available dollars is likely to make raw materials more expensive.
Taken together, these pressures form a real threat to the recent downward price moves Ghanaians have recently enjoyed. For contractors, developers, and anyone planning to build, the combination of factors is a timebomb for the recent price drops. These global factors and rising costs are likely to trigger a price increase. Staying vigilant and acting early is a necessity to avoid getting caught off guard.
