Estimate of railcar scrapping revenues
In 2014, Metal Expert Consulting has conducted a research to estimate revenues that could be obtained either from scrapping railcars or from selling them by parts.
The issue has become increasingly important since last year. In 2013, Russian Railways said it had to write off for recycling some 250,000-300,000 of railcars (the total fleet is over 1.2 million railcars). According to the new regulations of the Customs Union that came in force in August 2014, to prolong railcars’ operation life, “upgrade and certification are needed.” However, as new regulations have not been actually adopted yet, the used railcars are idling. In October 2014 Russian Railways told operators to start recycling the first 70,000 of old railcars banned from being used by new regulations.
The research shows that:
- it is much more efficient to sell old freight railcars by parts than sell them as scrap (however, this difference reduces depending on operation life and wear degree);
- as a rule, standard railcars sell as second-hand parts just in the amount of 10-10.5 t per railcar; the remaining parts of the railcar could be sold as scrap only;
- the most demanded used parts are:
а) castings, including bolsters and side frames;
б) wheel rims, wheel sets;
According to Metal Expert Consulting, as of mid-2014, such parts of one railcar used for 5 years could be sold for RUB 750,000 (without VAT), which accounts for over 80% of total revenues from selling the whole railcar as used parts and scrap.
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