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China’s Jan-Jun rail infrastructure FAI up 1.2% on year

China’s fixed asset investment on railways and rail infrastructure reached Yuan 325.8 billion ($46.4 billion) over January-June, up Yuan 38 billion or 1.2% on year. Within the total, the investment in railway infrastructure alone reached Yuan 245.1 billion, recording an on-year increase of 3.7%, according to a post on the website of the China State Railway Group (China Railway) on July 5.
The year-on-year growth in the first half year was largely attributed by the increase in April-June spending, which saw railway investment reach Yuan 245.9 billion over the quarter, up 11.4% on year. Within the Q2 investment, railway infrastructure accounted for Yuan 179.7 billion, also up 16.4% on year. This had exceeded the original plan, and also made up for the uncompleted investment in the first quarter over January-March.

Spending on rail during first quarter stood at only Yuan 79.9 billion, down by a large 21% on year, mainly due to the nationwide spread of COVID-19 over the period, according to China Railway.

“The large increase in railway investment in the second quarter was a result of the significant recovery in organizational efficiency and the implementation of construction projects after the impact of COVID-19 had gradually weakened,” a Shanghai-based analyst commented.

According to his own calculation, total investment in railways in the second quarter may require around 8.18 million tonnes of steel, including rails, rebar and steel plate, based on the assumption that every Yuan 100 million of investment equates to 3,330 tonnes of steel demand.

At the end of 2019, China’s Ministry of Transportation had set a railway investment target for 2020 of around Yuan 800 billion – similar to the target of Yuan 802.9 billion for 2019, Mysteel Global noted.

The post also noted that as of July 1 a total of 1,178 km of new railway lines had been inaugurated, including 605 km of high-speed railways. And during the second half year, China Railway said that some key railway projects are progressing now and will commission according to schedule. Thus, it estimated that the total of newly opened railway lines will reach 4,400 km for the whole year including 2,300 km of high-speed railway.

Written by Victoria Zou, zyongjia@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com