Have any of you had any recent first-hand experience that you can talk about regarding scrap valuations of such things as rail, locomotives, etc.? Specifically, the difference between "mill-ready" versus "as is"?

I've been called into the middle of an attempt to save a particular locomotive; the hang-up seems to be whether the amount of money raised is adequate to purchase the loco. The owners seem to be claiming the loco is worth $600/ton as is in one piece; elsewhere I was hearing $550 for mill-ready all-cut-up. Now, it's a diesel; I'm well aware that diesels are full of random copper (generator, air piping, wiring, etc.). But is that copper enough to warrant that big a mark-up? (Assume your typical SW1500/S2/GP9/70-tonner as an example.....) There's also the cost of cutting to bear, even if they turn a giant set of claws loose on it (man, can those things chew through hydraulic fluid!).......

For the 'value' of something as is where is, I usually figure maybe as much as 15% off the published mill ready pricing per ton. My reasoning is that when scrap was $100 per ton (ONLY) yards still bought stuff, cut it up, and had a few coins left in their pocket at the end of day.

Of course your argument and perspective might change depending on whether you were trying to buy something to save it, versus trying to harvest some value from something deemed surplus.

Something all steel requiring minimal disassembly with little foreign material (like a tank car) would obviously involve less work than diassembly and sorting of a locomotive's components.

Bob Kutella

That $550-600 / ton is closer to reality than what you'd like to think; that's pretty close to the published Heavy Melt prices by the American Metals Market, and its published weekly. Rail OTM is always worth more than Heavy Melt because it's such nice small stuff rather than big chunks; locomotives are the 'big chunks' department.

That varies by market too; east, west, etc.

That's the price the mills pay; so if a 'scrap dealer' is buying it then there's a discount against it so that he makes a profit; that's certainly negotiable but the 15% mentioned is rather common.

Then figure the estimated time & materials to actually cut whatever you have up to mill-sized chunks - that can be substantial. The offset to that is often that most - but not all - locomotives have big things that don't get scrapped and do get resold; truck frames, the frames themselves (often to Railpower), sometimes the prime mover. That's happening with any old GP's, some SW's, and Alcos.

Then there's freight - the buyer may be paying freight in a tight market or expecting the shipper to absorb it; a little inside intelligence always helps.

Whatever's left is what it's 'worth on the ground' which is what you should actually be paying in an appraisal.

Pluses and minuses in this particular situation:

Locomotive is an "odd duckling" that has no particular re-salable parts where it is--think the Romanian FAUR "Quarter Horse" in the USA, or a British-built Class 08 0-6-0 switcher, or a Lima-Hamilton or Whitcomb.

Loco is also sitting literally adjacent to a scrapper--the folks are trying to save it before it gets switched in for scrapping.

(Yeah, it shouldn't have gotten that far. Yeah, it's a weird loco to save, being an oddball. It's not my dog in this fight.)

Don't forget to figure in the cost of supplies to cut. i.e. O2, propane(costs more nowadays) , Tips, hoses that get cut or burned, fuel to load the scrap into what ever, labor, disposal of nasty stuff, slings that get cut or broken, Safety gear, labor, fire protection equipment (will get used sometimes) insurance costs both liability and enviromental,labor, Dumpster for the safe trash, etc etc. If using a shear they are big bucks and costly to keep up. the cost of the blades would amaze you. Did I mention labor?
Yes I've very recently scraped a loco or 2 and some frieght cars not to mention O.T.M. and rail.
The cost of making mill prep scrap goes up just as everything else does. the farther you go from prep size the less you make. That's why I bin my O.T.M. seperate. Goes right to the furnace and is good steel.

The former steam compress in McKinney, Texas has some large cast iron spare parts for the compress lying out in the open. He has tried to get scrappers to come and get them; but was told it would take "too much gas, too much to haul them off." Many of the steam compresses are still in place today; since they are often on the side the compress building next to the RR tracks, the scrapped parts would also have to be craned over active tracks, or the rail lines closed while the parts are trucked out. So they remain there to this day.

Interesting remarks form the scrapper. If these are large CAST IRON parts they would be fairly brittle and just dropping them would likely break them up, or dropping something on them. A different story if cast steel. It takes some skill to cut through a heavy cross section.

Bob Kutella