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Fueled by growing energy costs, shrinking supply and high tariffs, chlorine-based chemicals for the pool and spa industry have risen in price 20- to 50 percent since late 2004.
Currently, chlorine caustic is $350 per dry short ton, up from $100 last March. Chlorine is $330 per dry short ton vs. $200 last year.
“Raw materials and energy costs are increasing, [and] the cash cost to make chlorine caustic is 65 percent energy-related,” said Rick Smith, executive vice president of Chemical Market Associates Inc., a Houston chemical consulting firm that tracks chlorine prices. “The price today vs. the price 10 years ago … is 200 percent higher.
“The other thing that has happened is that between 1996 and 2002, the market had a lot of overcapacity. That put some downward pressure on prices and caused producers to slow their reinvestment in the market. So now, you have high cash costs and a tight supply situation,” Smith said.
Many manufacturers agree. “Part of the increase is to get back to a level of profitability in order to be able to invest back in the industry,” said David Stephenson, sales and business director of the Isocyanurates Division of Occidental Chemical Corp. in Dallas.
In addition, Stephenson said that high preliminary anti-dumping tariffs levied in December 2004 on trichlor and dichlor imported from China eventually will raise prices on those products. The final duties for these chlorinated isos will be established in June.
Occidental and other manufacturers are spreading the news, and the price increases have slowly trickled to pool retail and service companies. For example, SCP Pool Corp. recently informed its customers that a 90-pound bucket of tabs would cost $165, up from $110. That’s sparked some dealers to stock up. Some stores have even had buckets of tabs stolen, alerting others to take caution with the chemicals.
“We’re a BioGuard dealer and back in the fall, they told us that prices were soon going to rise,” said Stan Griffin, president of Griffin Pools & Spas in Lexington, S.C. “We bought tons of granular chlorine ... to get through May.”
Still, the swim season hasn’t hit his region. When it does, Griffin plans to tell unhappy customers to consider alternative sanitizers. “We can’t predict what the price of chlorine is going to be,” he said. “We’re trying to convince clients to go with alter-natives like the salt-generator systems.
“We have around 2,500 pools on our account that we service each year,” Griffin continued. “With the volume we do, even a small increase in price affects us a lot.”
There is hope, though, said CMI’s Smith. “Our forecast says that toward the latter part of this year, energy prices will start to moderate. Chlorine will probably be down to $270 a ton this time next year.
“In the meantime, watch gasoline,” Smith said. “When that starts to go down, when you see your heating or energy bills go down, the pool bill will follow at some point.”
copyright 2005 Pool & Spa News
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