Even as builders slash margins and drop prices to unthinkable lows,
it’s never been more expensive to maintain a pool.
From the last summer through the beginning of 2009, the pool
industry has seen aggressive price hikes for chemicals. The
increases have cumulatively added anywhere from 15- to 30 percent
to the cost of chlorine, algaecides and additives. Furthermore,
these new costs come at a time when consumers are shoring up their
But for many, the price increases were an inevitable product of
“At the end of the day, chemicals in this industry have
been a bargain for a very, very long period of time,” says
Manuel J. Perez de la Mesa, CEO of Pool Corp in
Covington, La. “The prices have been artificially
Although no one likes to talk pricing — Arch
Chemicals declined comment for this story — the cost of
making these products has been on a steady climb.
Without question, the biggest impact on price increases has been
raw materials. The chlor-alkalai market has fluctuated wildly over
the last 18 months, and pricing on isocyanurates has steadily
increased. Packaging is another key factor behind price hikes. And
fuel costs play a part as well, as chemical manufacturers pass on
surcharges incurred from freight carriers.
Unfortunately, these costs may not be coming down anytime soon.
But the following metrics provide a much clearer picture of the
pool chemical marketplace.
In the pool industry, raw material costs are especially critical.
Unlike other household products, which may be diluted heavily with
water, the make-up of most sanitizers is primarily raw chlorine.
Even most algaecides are 40- to 50 percent active.
As such, raw materials pricing weighs heavily into the operating
costs of a manufacturer.
“The most important thing in our industry is material
costs,” says Charlie Schobel, BioLab’s vice president and general manager,
pool and spa products.
The largest determinant of raw materials pricing for pool
chemicals is the chlor-alkalai market, which has been in a state of
flux for some time. Plants that produce chlorine also product
alkalai, or caustic soda, and the two don’t necessarily find
the same kind of buyers.
“Unfortunately those two markets don’t always move
together,” explains Joel Lindhal, director of chlor-alkalai
and vinyls studies for Chemical Market Associates Inc. in Houston. “The
timing being off by just six months means havoc on
Disparity in demand means chlor-alkalai plants have to balance
operating rates in between producing too much of one material and
not enough of the other, driving up the price of whatever is in the
While caustic soda prices were most recently affected, nearly
tripling by summer 2008, demand on chlorine drove prices up in
2007. But it wasn’t until last summer that manufacturers were
able to pass those costs onto the rest of the marketplace.
“Some companies like us have contracts, so those contracts
keep us from having the fluctuations,” Schobel says.
“Now that sometimes works in your favor and sometimes works
against your favor.”
Contracts also held back price increases on trichlor and dichlor
products until last year, which would have otherwise increased in
2007. These were generally due to increases in materials like urea
and chlorine that go into cyanuric acid.
Meanwhile, inflation hasn’t helped those companies that
use international suppliers. “A lot of the goods are
imported, so they went up in price, mainly because the dollar was
so weak,” notes Irwin Brown, vice president at United Chemical
Corp. in Piru, Calif.
The future for raw material costs is uncertain. More recently,
the demand for chlorine has been on the rise. By the beginning of
2009, industries that used caustic soda — pulp and paper,
automotive, etc. — started to really fade, and manufacturers
again adjusted their rates. Now that chlor-alkalai plants are
swimming in caustic soda, they can’t raise chlorine
production enough to meet demand.
“It looks like for another year or so, we’re going
to be long on caustic soda… and there will be upward pressure
on chlorine prices into 2010,” Lindhal says.
With operating rates crippling manufacturers that are already
faced with weaker demand, don’t expect any price relief
coming via raw material costs.
Of course, manufacturers are also footing the bill for whichever
containers are used to carry these chemicals. Packaging, like
everything else, has gone up, though it has had less of an impact
than rises in chlorine and isocyanurates.
Although a lesser consideration than raw material costs,
packaging is nonetheless influenced by fluctuations in the
commodities market. Consider that the primary raw material that
goes into packaging is polyethylene, which is used to make both
soft plastic bags and rigid 5-gallon buckets.
“If you rewind and look at the prices for those raw
materials a year ago, they were on the verge of reaching their
all-time historical high,” explains Howard Rappaport, who
studies the plastics and polymer markets for CMA.
Naturally, the increases made packaging more expensive, and
manufacturers have been forking out more dollars for 3- and
5-gallon buckets over the last few years. And even as fuel costs
have come down, it may take awhile for the plastics industry to
pass on any price breaks.
Among the most obvious and direct changes that affected chemical
manufacturers — as well as service companies, homeowners and
just about everyone else — were gas and transportation costs.
Naturally, freight costs went up too.
“Transportation costs are up, so it costs more to bring the
product in,” Brown says. “The product manufacturers
have to get that back somewhere.”
While rates were generally stable, carriers introduced fuel
surcharges to combat high gas prices. These surcharges combined
with a rise in packaging and raw material costs in 2008.
Furthermore, gas typically climbs in the summer because of the
increase in travel — inconvenient timing for an industry that
peaks in the sunny season.
Of course, the average price of on-highway diesel fuel has fallen
almost 50 percent from last summer. But as transportation has less
of an impact than raw material and packaging costs, the greater
effect isn’t seen in pool chemical pricing.