Expect Chlorine Shortages and Price Hikes This Summer

Wednesday, May 25th, 2005

by Dennis DiPaolo

Several types of products in the swimming pool industry are currently undergoing multiple price increases on the wholesale level, with some rationing and shortages already taking place. Intelligent retailers have been stocking up on these items since last summer, but we do foresee some small and large problems developing later this summer.

You have probably heard about the worldwide steel shortage that started about a year ago, and is being driven by the fast-growing economy in China. Some pool manufacturers ran out of pools last summer, and the rest had to increase prices. It could have been worse, though. East coast weather was lousy last summer, so demand wasn’t that high. As a pool owner, you would not be that affected, because almost nothing around a pool is steel except the pool itself! If you are buying a new pool, though, buy it now before things get worse.

Watch the price of gasoline. When crude oil is $55 a barrel, everything made out of oil goes up: like vinyl liners and everything made out of plastic (which is everything in a pool store). Freight costs to ship products from the factory to the store doubled last year due to fuel costs, health insurance, a shortage of trucking companies (at least of 10 of our inbound carriers have gone out of business in the past five years), and new federal laws last year that reduced the amount of hours per day a driver can drive.

However, the most serious problem this year will be with chlorine. American chlorine manufacturers won a lawsuit at the end of December, to force the federal government to impose tariffs of up to 200% on imported isocyanurate chlorines; which are almost all the chlorines used in swimming pools.

Truthfully, chlorine prices have been artificially low for over ten years, as the American manufacturers had to keep their prices low in order to compete. There are only a few manufacturers that actually make chlorine. They sell it by the ton. There are about 25 packagers, who make it into tablets and put the chlorine into one to one hundred pound buckets for retail sale. The day the lawsuit was won, the manufacturers raised their prices by 100%-150% and the packagers raised their prices from 30% to 80%.
Everyone knew this might happen, and everyone who had the space and the money stocked up on chlorine in December. We did. However, no one could stock up on an entire year’s worth of chlorine. Almost every state and city has regulations on how much chlorine you can keep in one place, and fire departments are not willing to allow new warehouses. Guess who was having their national convention 15 miles from that giant chlorine warehouse that burned down in Georgia last spring? The National Fire Chief’s Association! The chiefs all went home and looked around their towns to see if that could happen to them.

So what should you do? Stock up early and expect sticker-shock sooner or later. When will that be? It depends on the retailer. Some are already up 60%. Some are taking an average of their December costs and April costs and going up maybe 30%- 40%, (it depends on how much chlorine storage space you have). I’m going to keep prices low until after everyone else has gone up. We have a price guarantee that promises that we will always have the lowest price within 300 square miles. We have the biggest warehouse around, and I know that we will outlast all the competition.

The scariest part of all this is the expected shortages. Supposedly, importers have cut back on their orders by millions of pounds. However, it’s hard to see how the American manufacturers can increase by that much in less than a year—it’s been over ten years since all pool chlorine was made in America. We’ll see. Baquacil is not going up in price, and it’s all made in America anyway. Certainly, as chlorine prices rise, it will make more and more sense to try Baquacil. Speaking of which, Baquacil’s new Ultra program worked GREAT last year. Everyone loved it.