China Railway to hike rail orders in 2009

Tuesday, Feb 03, 2009

Reuters reported that China's railway Ministry will nearly double this year the amount of rails it orders from four big domestic steel makers, as part of an infrastructure drive to shore up industry.

As per report, the Ministry of Railways sent requests for a total of 3.25 million tonnes of steel rail to units under Baoshan Iron and Steel Company Limited, Angang Steel Company Limited, PZH Steel and Wuhan Iron & Steel Company. The paper said that the orders would be a big jump on 2008, when the ministry ordered 1.88 million tonnes.

The report did not specify how the amount would be divided among the four makers, who would have to use much of their rail making capacity to fill the order. Nor did it say how much the ministry will pay, noting that in 2008 prices it set were about CNY 1,000 per tonne less than general market prices.

The Ministry of Railways is one of the big beneficiaries of Beijing's plans to boost flagging growth by pumping state investment into transport and other infrastructure. It has said that it plans to invest CNY 600 billion (USD87bn) in 2009, up from CNY 350 billion. (USD51bn) The biggest of the Chinese steel makers in the order, Baoshan Iron and Steel, can produce 1.4 million tonnes of rail a year.