Dynamics Inc. (SDI) executives expect a long-awaited
improvement in steel rail demand to happen in the near
"Based on recent
investment plans announced by major North American rail
consumers, we believe the domestic rail market could grow
meaningfully in the coming years," president and chief
executive officer Mark D. Millett said during an earnings
Fort Wayne, Ind.-based
SDI will commission new premium rail production equipment by
year-end, with product testing through the first quarter of
2014. Previously tested material "has been enthusiastically
received by several domestic (Class I) railroads," he said.
By the end of 2015,
the companys Structural and Rail division in Columbia
City, Ind., will have an annual capacity of more than 300,000
tons of standard strength and premium head-hardened rail. SDI
invested $26 million in equipment to roll and harden the
product through heat treating. Class I railroads typically
specify head-hardened rail.
competitors for rail production are Evraz Inc. North
Americas Pueblo, Colo., facility and ArcelorMittal USA
LLCs Steelton, Pa., location. Railroads also purchase
significant amounts of steel rail from Japan, the Czech
Republic, Italy, China and Canada. U.S. imports of steel rail
through for the first nine months of the year, including
preliminary August data and September licenses issued through
Sept. 25, totaled 265,789 tonnes, according to the U.S.
Commerce Departments Import Administration.
Premium product has
grown to half of SDIs output from 25 percent initially,
according to Richard Teets, president and chief operating
officer for steel, noting that this will continue to be the
case because replacing and maintaining standard strength
material takes more time and costs more.
Premium rail "is some
of the most critical product SDI will supply to any market (and
carries) high liability," he said, so trials and thorough tests
by railroads and third parties are crucial.
Annual U.S. rail
shipments range from 800,000 to 1.3 million tons, but that
figure should increase to 1.5 million to 1.6 million tons by
2016 or 2017 considering announced rail infrastructure projects
and growth in U.S. shale gas and oil production, Millett
railroads have earmarked billions of dollars for infrastructure
maintenance and expansions so far this year (
amm.com, Oct. 10).
"Were in a great
position to leverage that expansion of the market," Millett