Examples of how quickly prices like scrap steel can change in a rail project like an abandonment or a subsidized line service asset valuation

It is important to consider market realities when undertaking net liquidation or rail track materials and other rail project economic assessments under ICC/STB regulatory procedures for railways.

Market prices can swing dramatically.  15% range within a week’s time as shown in one exhibit and extreme ranges of 70% monthly.  These are not theories.  These are actual market force occurrences.

The two attached exhibits identify price of materials and scrap changes over two different time periods using two different data sources.  The URL for the sources are noted if you  care to check for more information.

Collecting railroad materials and holding onto them for long term value change and higher price sales can be risky.  Timing of sales for scrap or for possible but limited relay use is an art form.  It may require hedging.

Steel scrap collected in the period after the global recession of 2007-09 and held for higher prices is now in mid year 2015 worth a lot less per ton (or metric ton).

These prices swings are important to railway asset managers from the US to South Africa. — and from Brazil to Mongolia.  The market for scrap rail is global and highly influenced by the risks and opportunities today in the China steel market.

Scrap rails and rail materials along with all forms of scrap steel are also seeing price competition from the sale of unused steel billets that are worth more than the miscellaneous scrap.  When the price ranges are close, the demand for scrap declines.

 

Examples of price volatility in real steel markets j Blaze

Market Timing & Price Volatility of Scrap against

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