Sumitomo Metals Expects Rail Wheel Shipment Increase in 2010

Sumitomo Metal Industries expects for shipment increase of rail wheels in 2010. The demand has gradually recovered in USA, the largest importer of Sumitomo Metals’ rail wheels. Sumitomo Metals also tries to follow the overseas demand growth for rail wheels in cooperation with Japanese railway related companies especially for high speed railway projects in Brazil, Vietnam and other emerging countries.

Rail wheel demand in North America was 1.5 million pieces per year at the peak before Lehman Brothers’ collapse. The demand declined to 1 million pieces in 2009 but currently turned upward along rail transportation recovery and inventory adjustment completion in the area. Rail wheel demand for new rail cars is expected to emerge at maximum 0.5 million pieces per year. The demand would increase in and after the second half of 2010.

Sumitomo Metals expanded rail wheel output capacity to 240,000 pieces per year from previous 200,000 pieces at Osaka steel works, Japan in 2008. The firm supplies 100,000 pieces for domestic customers and 140,000 pieces for export, among which 100,000 pieces are for North America. In 2009, the shipment for North America decreased to 80,000 pieces due to global economic deterioration.

Sumitomo Metals will supply total 7,000 pieces of rail wheels during 2009-2011 for Taiwanese high speed railway and German railway company. The firm concluded a long-term contract with German railway company in 2009. For Japanese domestic market, Sumitomo Metals covers all wheel and axle demand from Japan Railway Company and major private railway companies. The demand is stable.

In USA, Brazil, Vietnam and India, high speed railway constructions are scheduled and Japanese railway related companies are approaching the market. If Japanese companies receive the project orders, replacing demand of rail wheels will emerge for long terms.