Market Recap: RISI Crow’s Construction Materials Cost Index
A price index of lumber and panels used in actual construction for Sept. 8, 2017.
Western: regional species perimeter foundation
Southern: regional species slab construction
Crow's Market Recap: A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow's Weekly Market Report.
The quest by SPF buyers to replenish thin inventories continued. Sales activity following the long holiday weekend started immediately where it left off, eventually pushing mill order files out into early October in some instances. Producers welcomed price increases, in part due to significant strengthening of the Canadian dollar during the week.
- Momentum from the week prior carried over after the holiday and increased, as Southern Pine lumber buyers pressed harder to cover needs. The significant move to replenish inventories depleted in August prompted #2 price increases of $5-15.
- Coastal mills with consistent volumes of lumber to sell reported solid sales activity. That and limited supplies available at other mills generated higher pricing across most dimension lumber items. Wildfires persisted throughout the West.
- Demand for Inland lumber species strong. Solid activity in both Fir-Larch and Hem-Fir in all Std&Btr/#2&Btr lumber, Select Structural and MSR.
- Stud prices maintained a firmer stance and managed to make moderate gains in some cases. With the CVD-free period now firmly in place, buyers discounted any potential effects it will have on the market. Some additional attention was directed to the West, where wildfires limited log availability and sawmill production.
- Radiata Pine is more than amply supplied for domestic solid lineal moulding producers.
- Ponderosa Pine Mldg&Btr and Shop is quite stable, although some reports indicate more than ample supplies of 5/4 #3 Shop. Ponderosa Pine 4/4 Selects and Commons showed “stable but muted activity.” The market did not regain any special energy, as it often does following Labor Day.
- Western Red Cedar sales activity was lackluster coming off the long holiday weekend. Buyers continued to purchase immediate needs without extending purchases too far into October. Prices remained a concern among buyers, and as the year progresses, potentially persistent high prices are likely to cause further consternation.
In the aftermath of Hurricane Harvey and with the impending landfall of monster Hurricane Irma, OSB markets went into further disarray this week. As Irma intensified and drew a bead on Florida, numerous producers got spooky and went off the market. Order files moved out generally to the first week of October, with some in Sept. 25 and others Oct. 9.
- Storm-related buying in the Southern Pine plywood market increased as Hurricane Irma spun its way toward Florida. Traders noted the table had been set for such a market run after buyers limited their purchases and maintained low inventories.
- Western Fir plywood demand hit another gear after prices firmed and edged higher the week prior. Hurricanes in the South and wildfires in the West contributed to the momentum.
- Canadian plywood markets continue to derive their strength from low inventory levels and a promising fall buy. Some discounting was done – enough to push order files into the week of September 25 and some into October – but by week’s end, producers were resolutely back to previous levels.
- Buyers of particleboard and MDF returned to their normal routine after the long holiday weekend. Some replenished while others worked down inventory purchased prior to the close of August. Producers reported no significant increases in sales activity.
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Regulatory Wrap-Up: Minimum wages on the ballot
Massachusetts: The attorney general’s office certified a $15/hr minimum wage initiative for the 2018 ballot. The language calls for a gradual increase from the current $11/hr to $15/hr by 2022 as well as a raise in the hourly tip wage from the current $3.75/hr to $9/hr by 2022. Proponents have until Dec. 6 to collect 64,750 signatures. The legislature can then choose to pass and enact the measure, or if no action is taken, proponents must collect additional signatures (roughly 11,000) before July 2018 in order to qualify for the Nov. 2018 ballot.
Michigan: A ballot initiative to increase the minimum wage to $12/hr by 2022 and also incrementally increase the minimum wage for tipped workers until they reach the full minimum wage by 2024 was officially approved by the Board of State Canvassers. Proponents will begin collecting the roughly 252,000 valid voter signatures necessary to place the measure on the 2018 ballot.
Massachusetts: The attorney general’s office certified a paid leave initiative that could appear on the 2018 ballot. The language allows for employees to take up to 16 weeks of family leave or 26 weeks of medical leave, but cannot exceed 26 weeks total in one year. Employees would receive 90% of their average weekly earnings, up to $1,000 per week with adjustments based on inflation beginning in 2021. The initiative would create a trust fund into which employers would pay 0.63% of employee’s annual wages, up to half of which can be deducted from employee salaries. The contribution rate would be subject to review beginning in 2021. As with the minimum wage ballot initiative, proponents have until Dec. 6 to collect 64,750 signatures. The legislature can then choose to pass and enact the measure, or if no action is taken, proponents must collect additional signatures (roughly 11,000) before July 2018 in order to qualify for the Nov. 2018 ballot.
Austin, Texas: Advocates announced plans to push for a paid family leave ordinance this week. Council Member Greg Casar joined proponents in calling for the ordinance to move forward and said he hoped the council could complete legislation by February 2018.
Portland, Maine: The mayor has proposed a paid leave ordinance which would require all businesses in the city to offer one hour of sick leave for every 30 hours worked. Employees could accrue no more than six full days of paid leave in a calendar year. The ordinance will be voted on by a city council committee on Sept. 16, although it is unclear if the full council will vote on the language prior to the conclusion of their 2017 term in November.
Washington, D.C.: The D.C. Council may review the paid leave law that was passed last year that requires employers to offer eight weeks of paid family leave. Under the law, the program is funded by a 0.62% payroll tax paid for by employers. The funding mechanism has been hotly debated since the law passed. The mayor has publicly expressed serious concerns with the payment mechanism, although she did not veto the legislation. Several council members have proposed replacement legislation, supported by the business community, that decreases the financial burden on employers. The council is set to meet over the next month and is expected to revisit the issue.
New York: Gov. Cuomo announced that the state labor department will hold public hearings on employee scheduling regulations. The long-awaited regulations are expected to apply to a wider range of businesses than the New York City law and will likely preempt the city regulations.
U.S. House: Legislation passed the House Judiciary Committee 15-9 this week that is designed to protect businesses from excessive litigation for alleged violations of the Americans with Disabilities Act. The bill passed the same committee during the last Congress but failed to advance further. The bill has yet to be scheduled for floor action.
Labor Department: President Trump announced the appointment of Cheryl Stanton to head the Department of Labor’s Wage and Hour Division. Stanton currently heads the South Carolina Department of Employment and Workforce. The Wage and Hour Division enforces federal minimum wage and overtime laws and drew criticism during the Obama Administration for its positions on joint employer liability.
Overtime: The Trump Administration officially ended its defense of the controversial overtime rule following a judge’s decision to block the regulation from going into effect.
Autonomous Vehicles: The U.S. House passed legislation to create a regulatory framework for self-driving cars. The legislation would empower the Department of Transportation to promulgate rules within a year that allow driverless cars to share roads and require performance standards related to software, sensors and the interaction between passengers and cars. The U.S. Senate has yet to take up the legislation and safety concerns related to cargo trucks may take center stage in that debate.
California: A ballot initiative proposed by the Californians for Consumer Privacy, would, if passed, allow consumers to opt out of personal data collection by all businesses in the state. The language would mandate that consumers be allowed to demand disclosures of any individual personal information that has been collected and whether or not that information was transferred or sold to another entity. The language also allows for consumers to demand that their personal information not be collected or resold without fear of discrimination. The proposed initiative comes as legislation seeking to create an opt-in system for consumer data collection by telecommunications companies remains stalled in the state senate.
Massachusetts: The attorney general certified a ballot initiative establishing an additional 4% state income tax on portions of annual taxable income over $1 million. As with the minimum wage and paid leave initiatives, proponents have until Dec. 6 to collect 64,750 signatures. The legislature can then choose to pass and enact the measure, or if no action is taken, proponents must collect additional signatures (roughly 11,000) before July 2018 in order to qualify for the Nov. 2018 ballot.
Massachusetts: The attorney general certified a ballot initiative seeking to lower the state sales tax rate from 6.25% to either 5% or 4.5% and make permanent an annual sales tax holiday. As with the other ballot initiatives once the first round of signatures has been collected, the legislature can then choose to legislate on the issue.
NAFTA: The second round of NAFTA trade negotiations between the U.S., Mexico and Canada concluded last week. No significant developments on any of the controversial issues have been reported and the third round of talks are scheduled for Sept. 23 in Canada.
- Expect immigration to remain in the headlines over the coming weeks and months. The emotionally-charged DACA issue will drive much of the coverage. Many employers have publicly advocated for the program’s continuation, arguing that its elimination will have a sharp, negative economic impact. Some employers clearly view this issue as an opportunity to support their employees and customers.
- The ongoing feud between President Trump and Republican congressional leaders escalated this week when Trump unexpectedly cut a deal with Democratic leadership on raising the debt limit and continuing to fund the government through December. The ongoing mistrust and rancor between the White House and Senate Majority Leader Mitch McConnell in particular, coupled with the quickly shrinking congressional calendar, continues to threaten key industry priorities – namely comprehensive tax reform.
Legislature Status for Week of 9/11/17
- The United States Senate is in session
- The United States House is in session
- Ten state legislatures are currently in regular session: California, Illinois, Massachusetts, Michigan, New Jersey, North Carolina, New York. Ohio, Pennsylvania and Wisconsin.
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Quikrete Industry Dashboard: Strong job numbers
The latest Quikrete Industry Dashboard shows downward trends on the residential construction and home sales charts. But there’s good news on the “Consumer Watch” — especially the strong jobs story. Stocks continue to gravitate toward the upper right quadrant of the HBSDealer Stock Roundup.
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