China to accelerate rail construction in 2019

China will accelerate building of new railway lines in 2019 while approving several rail projects to be built over the next 5-10 years, adding to the country's steel demand.

The country plans to put into operation 6,800km of new railway lines in 2019 compared with 4,683km that became operational in 2018. The country invested $117bn in building new railway lines in 2018 but the government did not provide any forecasts for this year's investment.

Railroad spending generates 640t of steel demand for every kilometre of track on average globally, according to US bank Morgan Stanley. Steel use in building railway tracks is less than that for building bridges and buildings.

China's main economic planning agency the NDRC this week approved a $33.7bn railway project along the Yangtze river delta. Most of the project will be in Jiangsu province with total track distance of 980km, with some track laid in Anhui province as well. The project is expected to be built over 2019-25.

The NDRC last month approved eight urban railway projects with total investment of $125bn in various provinces, according to state-controlled media.

Chinese steel mills expect higher spending on infrastructure projects this year will offset an expected slowdown in real estate growth. Infrastructure growth slowed sharply in 2018 at 3.7pc during January-November compared with 19pc for 2017.

China's central government this week also unveiled plans to build an urban centre in Tongzhou district, the eastern part of Beijing city, where some of its administrative functions will relocate to. The project, which plans to have a total population of 1.3mn residents by 2035, will involve building a public transport network but will not develop real estate projects on a large scale.