China is not likely to develop sizable oversupply due to production restrictions that their government imposed, but also due to only a modest 10-million -ton increase in Chinese capacity coming online during the balance of this year. The American Metal Market forecasts a 40 million metric ton increase in Chinese demand for 2004 vs. 2003

• Coke in Short Supply

Steel supply outside of China will actually finish 2004 producing 25 million tons less than capacity as a result of continuing shortages of coke.

With domestic steel mills no longer selling coke on the open market and keeping it for their own production, new sources have to be developed. While coke could become more plentiful in the second half of 2005, it is not forecasted to turnaround until early 2006 while new sources in many countries (including 183 new batteries under construction in China) come online in late 2005.

Scrap Price's Skyrocket

While the large integrated mills require coke, the smaller mills require scrap for their production. Scrap prices skyrocketed by more than 300 percent this year. With the price of scrap forecasted to "moderate" it will still remain at historically very high numbers. International scrap prices have started to rise again after four consecutive months of declines. The US exported 21 percent more scrap in 2003 vs. 2002 and early indications are that the rate of export in 2004 will not be much less, thus impacting domestic supply and cost.

The Fall of the US Dollar

The US dollar continues to hover around its record lows versus the Euro and other major Asian currencies. With the low value of the dollar, foreign steel is much more expensive to procure and import into the US. Additionally, there is more incentive for US producers to sell their steel overseas since they profit form a favorable currency exchange. The current increase of supply of metal framing into the market is due to the arrival of high priced foreign steel.

The Future of Steel

Many steel analysts foresee steel becoming less volatile to its historical boom/bust cycles as a result of a stronger and more profitable industry and to reasonable US, European and Asian projected G.P. growth through 2006. While steel may not stay at its current highs into 2005, it is unlikely to retreat back to where it was. Nor will its cycles shift so quickly as we have experienced in the past.

While unforseen global events could unexpectedly impact the short term, what we are currently dealing within the steel industry is not a short-term situation, but a significant shift and restructuring of both the US steel industry and the worldwide steel industry.

CBMDA is a member of the Construction Industry Legislative Council (CILC). This is an excerpt from a letter to Skip Daum, CILC Advocate.

I want to update you on the workers' compensation reform process.  Three important events have occurred in the last month.  In summary, California workers' compensation costs are now on the down escalator but this escalator is not moving fast enough to give businesses the relief they need to remain competitive.

1) We completed the first part of the required investigation of State Compensation Insurance Fund (State Fund) in which we concluded that the State owned insurance company can achieve additional reductions of 6 percent in its premium rates if it institutes several reforms. This reduction is in addition to the announced reduction of 9.7 percent and does not include additional savings associated with the reform legislation.  For a full report check our web site at www.insurance.ca.gov.

2)      On July 12 we reported the cumulative, average, premium-weighted rate reduction since July 2003 for all workers' compensation carriers at -10.38 percent.  The good news is that some major carriers dropped their rates significantly lower than the -10.38 percent average ((Liberty Mutual - reduction of 17.54 percent; Republic Indemnity - reduction of 20.48 percent).   The bad news is that State Fund, with 53 percent of the market, reduced its rates only 9.7 percent.

3)      Governor Schwarzenegger appointed three new members to the State Fund Board of Directors.  I look forward to working with the new Board as they work to resolve the many management, operational, and financial issues at State Fund.

August is the final month of the legislative session and will be the last opportunity this year to address important "clean-up" legislation which is necessary to achieve the full impact of the reforms, also, the Administrative Director of the Division of Workers' Compensation, within the Department of Industrial Relations, is now drafting regulations to implement several key provisions of the most recent reform -- SB 899. 

Sincerely,

JOHN GARAMENDI

Insurance Commissioner

How New Paid Family Leave Benefits Interact with Leave Laws

Starting July 1, employees were able to receive benefits from California's new paid family leave program (PFL). The following are answers to some frequently asked questions.

• If the employer has fewer than 50 employees and is not subject to the federal Family Medical Leave Act (FMLA)/California Family Rights Act (CFRA), must the employer grant time off under PFL?

 PFL is not a leave of absence -- it is a benefit payment. The right to leave can exist only under FMLA/CFRA or kin care, or your own policy or practice. If the employee is not entitled to a statutory leave of absence or from your own policy, there is no leave and no job protection.

If an employee is eligible for FMLA/CFRA and is absent for a reason that qualifies as FMLA/CFRA leave and is eligible for PFL benefits, the employee's job will be protected under FMLA/CFRA leave.

• If both parents work at the same company and in the same department, must the company allow time off for baby bonding for both parents?

PFL does not limit the baby bonding time to one parent at a time. Both parents may apply for baby bonding benefits, and may take the time off together. If the mother has received state disability insurance (SDI) benefits, she will not have to meet a second seven-day waiting period. The father will have to wait the seven-day waiting period before receiving PFL benefits.

If the employees both work for you and are both eligible for baby bonding under CFRA, you may limit the total time for baby bonding to a total of 12 weeks. The parents would determine how much time is taken by each employee and when. Baby bonding must be completed within one year from the date of birth, adoption or placement of the child.

• May we require that employees use all paid sick leave before applying for PFL benefits?

No. You may require only the use of one week of paid sick leave during the otherwise unpaid seven-day waiting period. You may not interfere with the employee's right to receive benefits -- either PFL or SDI. You may require that employees supplement SDI or PFL benefits with their paid sick leave, but only if the employee would otherwise be able to use the sick leave.

For example, an employee accrues four weeks of sick leave per year and has already used two weeks of sick leave for kin care -- to care for an ill child. Your policy states that only half of the annual accrual may be used for kin care, and the remaining sick leave can be used only for the employee's own illness or injury. Under that circumstance, the employee who is receiving SDI (for the employee's own disability) could be required to supplement SDI benefits with sick leave.

However, you could not require the use of sick leave to supplement PFL benefits -- because PFL benefits are paid when you care for a family member. Your policy says the remaining sick leave cannot be used to care for anyone else.

• If an employee was on SDI as of July 1, 2004, do we need to provide the employee with a PFL pamphlet?

 SDI benefits are paid to an employee who is out for their own illness or injury. The only time an employee on SDI will then receive PFL benefits is if the absence is related to pregnancy. In that case, once the employee is no longer disabled by pregnancy, she may be eligible for PFL benefits during baby bonding. In that instance, you should send the PFL pamphlet to the employee at home, if she did not return to work on or after July 1, 2004.

• Does the health care provider (certifying the need for care for receipt of PFL benefits) have to be licensed in California?

No. If the health care provider is licensed outside of California, the application for PFL benefits requires that the certification of the need for care also be accompanied by a certification that the doctor is licensed to practice in the other state or country.

CBMDA's Annual Meeting Deemed Successful in Majestic Sedona, Arizona

Perfect weather, perfect setting and a perfect resort all made CBMDA's Annual Meeting a memorable event.

Members and their spouse enjoyed the five star Enchantment Resort & Spa in Boynton Canyon.

"These Conference's provide a wonderful chance to develop relationships in business. We see old friends and meet new ones, in a casual, relaxed atmosphere. Throughout the years we have cultivated these relationships and have benefited personally and professionally," said Kristi Toia owner of Glendale Builders' Supplies.

CBMDA Fall Conference

Ojai Valley Inn and Spa

Mix business with pleasure. Escape to the historic, newly renovated, Ojai Valley Inn & Spa. Nestled on 220 tree-shaded acres, this legendary resort of casual elegance offers you a celebrated golf course which has been home to seven Senior PGA tournaments. Spa Ojai - A 31,000 square foot full-service spa village. Creative cuisine in two restaurants, three swimming pools, 8 tennis courts, plus activities like biking, hiking, fishing, and horseback riding. All around are spectacular views of the valley and the majestic Topa Topa mountains.

The Conference includes, three nights lodging, porterage, use of spa facilities & hospitality room, breakfast meeting, reception, barbeque buffet and dinner at the Ranch House in picturesque Ojai village.

California Building Material Dealers' Association

2286 E. Carson St. #318, Long Beach, CA 90807

562/422-1824, Fax 562/422-1805, email bmaterials@aol.com, www.cbmda.com.