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Chlorine shortage stands to wreak havoc on summer pool season: Goldman Sachs

·Anchor, Editor-at-Large
·3 min read
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Summer pool season may be over for many before it even started, provided one wants to take a dip in sanitized self-contained body of water in their backyard. 

Goldman Sachs analyst Kate McShane warns in new research on Monday the chlorine shortage building steam across the country is hardly improving. The problem — in terms of chlorine availability and prices —stems from Hurricane Laura causing a fire last August at one of the country's largest chlorine tablet makers BioLab. The plant was located in Louisiana. 

McShane notes that chlorine prices surged 37% year over year in March due to the supply shortage. Prices are seen spiking 58% year over year from June to August, McShane points out, right smack in the middle of pool using season. 

"Of the 26 pool shops we spoke to, 15 expressed uncertainty or doubt when asked about whether they will have enough chlorine for pool season. Adding to the pressure created by the chlorine shortage, respondents called out a plastic bucket shortage, driven by COVID-related manufacturing slowdowns, which has made procuring certain volume sizes of chlorine more difficult for retailers, and has led suppliers to deliver chlorine in either bags or in buckets with different colored lids, according to respondents," McShane said. 

McShane continued, "When asked about whether the cost and availability of chlorine have improved in the last month or so, several respondents noted that while the supply of chlorine has improved somewhat, cost has not."

Commentary from the industry's main pool equipment supplier Pool Corp. on its recent earnings day underscores the severity of the chlorine shortage. 

"I mean overall, I would tell you the price on dichlor and trichlor [chlorine tablets], which is the product that was impacted by the shortage, they're up about 60%. So if you think about how that's going to shake out for the balance of the year, it will probably remain at elevated level because I believe that the industry is going to be short for the season," Pool Corp CFO Mark Joslin told analysts on an April 22 earnings call.

The shortage will likely lead to pool owners to get creative on pool sanitization, Joslin said. 

"Now that simply means that people are going to move their method of sanitization to another product, either a granular product or a liquid product. But there's no shortage of ways to sanitize the pool. It just simply means at a certain point people will shift. We've also seen certain parts of the country accelerating the use of salt as a method of sanitization too," Joslin added.

Pool Corp. shares haven't been slowed down a bit by the chlorine issue — shares are up 11% as the company continues to benefit from more people buying pools during the pandemic. First quarter sales and profits rose 57% and 165%, respectively. 

LONDON, ENGLAND - APRIL 23: Swimmers take part in a photoshoot to advertise the new 'sky pool' near Embassy Gardens in south-west London on April 23, 2021 in London, England. The pool sits 10 storeys up, spanning 25 metres between two apartment buildings and will open to residents from May 19, 2021. (Photo by Dan Kitwood/Getty Images)
LONDON, ENGLAND - APRIL 23: Swimmers take part in a photoshoot to advertise the new 'sky pool' near Embassy Gardens in south-west London on April 23, 2021 in London, England. The pool sits 10 storeys up, spanning 25 metres between two apartment buildings and will open to residents from May 19, 2021. (Photo by Dan Kitwood/Getty Images)

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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