State-run monopoly Indian Railways estimates that its demand for steel rail will rise by more than 38pc in the April 2019-March 2020 fiscal year, which it may try to fulfil by procuring rails from overseas and private domestic producers to reduce its reliance on state-controlled steelmaker Sail.
Steel rail demand is expected to be around 1.7mn t in 2019-20, up from actual consumption of 1.2mn t of rails during 2018-19, as the firm is aiming for track renewal of around 4,000km by the end of 2020.
Indian Railways initially estimated steel rail demand of 1.4mn t in 2018-19, but getting enough supplies was a challenge as Sail produced 985,000t in 2018-19 and private-sector Jindal Steel supplied an additional 97,400t. The firm floated a tender in July 2018 to procure 487,000t rail but rejected all overseas bids, with Jindal Steel winning a contract to supply a small portion of the tendered amount.
India's steel ministry has been opposed to Indian Railways importing rail as part of its overall mission to promote domestic steel manufacturing sector but the firm has pushed back, emphasising the need to quickly upgrade India's ageing rail network. Sail and Jindal Steel are the only two rail producers in India.
Sail was in the process of ramping up its new rail mill at its Bhilai steel plant in Chhattisgarh state, resulting in a shortfall of rail supply, said a Sail executive. The company expects to supply 1.2mn t of rails during 2019-20 compared with an output of 985,0000t in 2018-19. Sail's expansion at the Bhilai plant to 7mn t/yr of crude steel capacity from around 4mn t/yr, including a new 1.2mn t/yr rail mill, was completed in June 2018.
Jindal Steel has recently received a fresh order to supply 30,000t rails to Indian Railways. The company operates a 1mn t/yr rail mill at its 3.6mn t/yr integrated steel plant at the central Indian town of Raigarh. The company has already supplied rails to Iran and Bangladesh.
