A near standstill in building and construction has depressed market prices for raw materials such as chlorine, PVC, concrete and steel.
But that hasn’t necessarily translated into discounts for the pool and spa trade.
Raw chlorine prices could level off this year after months of declines due to falling demand, and weak pricing could prompt plant closures or scale-backs. However, most manufacturers in the pool industry are still playing catch-up from high chlorine prices in 2007 and 2008, when they were unable to raise their prices accordingly because of contracts.
As such, end-user prices have actually gone up. Greg Howard, president of Carecraft Inc. in San Juan Capistrano, Calif., reports that chlorine prices have increased approximately 21 percent since July 2008, with little relief in sight.
“We haven’t had anyone roll back prices yet,” Howard said. “The manufacturers said the cost of raw chlorine was up over 50 percent. They were saying that the materials they use to compound these chlorines were way up.”
On a different note, PVC prices have rebounded in recent months after bottoming out at the end of 2008.
Prices per pound are up a total of 3 cents since Feb. 1, due in part to strong exports.
Overall, the cost of North American PVC dropped about 23 percent after maxing out in August, according to market analysts.
Beginning in December 2008, a pair of major PVC manufacturers — OxyVinyls and Georgia Gulf Corp. — announced plans to close facilities. But producers are watching second-quarter construction, and analysts don’t expect additional plant closures until at least after the summer.
PVC price increases hit double digits heading into 2009.
“I think in general it went up 10 percent for everything plastic this year,” Howard said. “We haven’t gotten any notification [from the suppliers] that they’re lowering prices yet.”
Ray Whitford, president of Lifetime Pools in Palo Alto, Calif., believes a backlog of inventory could be the culprit.
“I think a lot of the suppliers are still working on a stockpile of materials that they purchased at a higher cost, so they’re not motivated at this time to reduce prices,” he said. “It’s a bit shocking to me. As of the beginning of the year, in my opinion, prices have dramatically increased, which in this market is a little hard to stomach.”
In addition, the price of concrete increased by 5 percent within the last year, according to figures from the Portland Cement Association.
Ken Simonson, chief economist with The Associated General Contractors of America, said cement prices were expected to climb markedly around the start of the new year.
“I know cement companies had announced very large increases — as much as 25 percent — last fall,” he said. “But they deferred some of those, scaled some of them back a bit.”
He also noted that concrete prices jumped significantly in the first eight months of 2008, but have since fallen back.
“All of the producers have been shutting plants and laying off workers,” he said. “I thought there would have been a big price drop, so I was surprised to hear about these increases.”
Steel prices have fallen steadily over the past year, according to industry data. And a 5.8 percent drop from December to January suggests the trend could continue.
“I have seen steel prices drop dramatically,” said Debra Smith, vice president of Pulliam Aquatech Pools in Fort Worth, Texas. “Our steel subcontractor even came in and gave us a discount because of that.”
Indeed, since mid-2008, the price of steel has plummeted more than 50 percent, and manufacturers have cut production in response to the global economic downturn.
In February, U.S. steel production stood at 3.8 million metric tons of crude, a drop of more than 54 percent compared with the same period a year ago, according to the World Steel Association.
Aside from China and Iran, nearly all major steel-producing countries saw production slow in February.
