Chlorine shortage to wreck havoc on summer pool season: GS
Goldman Sachs analyst Kate McShane warns in new research that the chlorine shortage building steam across the U.S. is hardly improving. Yahoo Finance’s Brian Sozzi weighs in.
Video Transcript
MYLES UDLAND: All right, welcome back to Yahoo Finance Live on this Tuesday morning. I mean, it is still cold outside. It just-- summer will not arrive. But the calendar says soon enough, it is pool season. Brian Sozzi, the problem is that some people will not have their pools ready for the summer.
BRIAN SOZZI: Yeah, there are going to be a lot of dirty pools out there, Myles and Julie. At least, that's what I took away from a note out of Goldman Sachs, highlighting the growing chlorine shortage. Yes, the chlorine tablet shortage. Goldman Sachs noting that this is what is the byproduct of a fire at a biolab facility last summer in Louisiana. This particular facility was one of the largest makers of chlorine tablets. Now it is starting to ripple across the market, just ahead of diving-- summer diving season in one's pool.
McShane-- Kate McShane is the analyst of Goldman Sachs-- noting that chlorine prices have surged, or did surge, 37% in March due to the shortage. She sees another potential spike of nearly 60% from June to August because of the shortage. Now, McShane contacted 26 pool shops across the country. And she was called-- what they brought up to her was that the shortage continues to get worse in many respects. And it's not just because the shortage of actual tablets. Now, because of the COVID-19 pandemic, chlorine companies are all seeing a shortage in plastic buckets to put the tablets in. So it's a double-pronged effect there, too, as well.
But it's interesting here, guys, because we've seen a big-- a very large increase in homeowners putting in new pools during the pandemic. They've spent a lot of time. They put pools into their homes. And that has benefited the likes of Pool Corp. That is the largest pool equipment company in the United States. The stock's up 11% year to date. And they just had their earnings last week, saying the chlorine shortage will not be getting any better any time soon. They're raising prices and suggesting to consumers to use salt in their pools to sanitize their pools. Very interesting stuff.
MYLES UDLAND: Julie, I know you're a saltwater pool enthusiast.
JULIE HYMAN: I mean, in theory, I am. But I don't think you can just put salt water in a chlorine pool. I think you need it to be made for salt water, if I'm not mistaken. I don't know.
MYLES UDLAND: [INAUDIBLE]
BRIAN SOZZI: Yeah, I'm not pouring table salt in my [INAUDIBLE] pool this year, guys.
JULIE HYMAN: No.
MYLES UDLAND: I mean, salt is-- salt water is incredibly corrosive. It would seem-- it would seem that dumping a bunch of salt in your already [INAUDIBLE] pool would not be an ideal solution for that. But, you know, Sozz, I think this story just does make me wonder. I am curious how you will evolve this series of there's a shortage of literally everything out there. Because it does seem that anything-- any possible item, an experience, a service, a good, anything is in short supply right now. It'll be a fascinating summer, I think, as all of us-- you know, we all think, oh, the world is going to be normal. But I think a lot of the stuff we're looking to be there is just not going to exist after a bizarre 2020.
