Factory Scrap Auctions: How They Work and How to Participate

Updated: May 28, 2026 · 17 min read

Every year, Indian public sector undertakings, defence establishments, port trusts, and large private manufacturers quietly dispose of hundreds of thousands of tonnes of ferrous and non-ferrous scrap through formal auction channels. In FY 2024-25, MSTC Ltd — the Government of India’s dedicated e-commerce and auction arm under the Ministry of Steel — processed scrap auction transactions worth thousands of crores of rupees across steel plants, railways, and central government departments. Yet a significant share of small and mid-sized scrap buyers in cities like Pune, Surat, and Hyderabad still purchase factory scrap exclusively through informal channels, leaving auction-grade material — often priced 8–15% below open-market rates at the start of bidding — entirely to larger trading houses. This guide closes that gap.

What a Factory Scrap Auction Actually Is — and Why It Matters Now

A factory scrap auction is a formal, competitive bidding process through which an industrial unit — a PSU steel plant, a defence ordnance factory, a port trust, a thermal power station, or a large private manufacturer — disposes of accumulated scrap material to the highest qualified bidder. The seller publishes a Notice Inviting Tender (NIT) or an e-auction notice specifying the material category, estimated quantity, inspection dates, EMD requirement, and lifting timeline. Registered bidders compete online or in person, and the highest bid above the reserve price wins the lot.

The relevance of formal auction channels has sharpened considerably post the Union Budget 2024-25, which extended and expanded the incentive structure under India’s Vehicle Scrapping Policy. The policy directs government departments and PSUs to scrap end-of-life fleet through Registered Vehicle Scrapping Facilities (RVSFs) or authorised auction channels, channelling significantly more ferrous scrap — chassis steel, engine blocks, body panels — into formal auction pipelines. The Ministry of Road Transport and Highways has been pushing state transport undertakings (STUs) to clear vehicle backlogs, and several STUs in Maharashtra, Tamil Nadu, and Uttar Pradesh ran scrap tenders for decommissioned buses through MSTC in 2024. For a buyer with the right registration and working capital, this represents a structural supply opportunity that informal yard purchases simply cannot match in scale or price transparency.

Beyond vehicles, SAIL (Steel Authority of India Limited), RINL (Rashtriya Ispat Nigam Limited), BHEL, Coal India subsidiaries, Indian Railways (through its Zonal Railway Material Management portals), ONGC, and port trusts under the Ministry of Ports, Shipping and Waterways are among the largest recurring sellers on government auction platforms. Their auction calendars are predictable, their material grades are documented, and their processes — while bureaucratic — are auditable.

The Two Dominant Platforms: MSTC and MJunction Explained

MSTC Ltd (formerly Metal Scrap Trade Corporation) is a Government of India enterprise under the Ministry of Steel and is the primary platform for PSU and government department scrap auctions. MSTC hosts e-auctions across categories including mild steel (MS) scrap, cast iron, non-ferrous metals (copper, aluminium, brass), condemned machinery, electrical equipment, and rubber. Sellers on MSTC include central government ministries, defence establishments, public sector banks (for repossessed assets), and large PSUs. The platform is accessible at mstcindia.co.in and requires a one-time registration with a nominal fee structure (currently ₹590 including GST for basic buyer registration).

MJunction Services Limited — a joint venture between SAIL and Tata Steel — is the other major player. MJunction operates the shoppricejunction portal and also manages B2B scrap auctions for SAIL plants (Bokaro, Bhilai, Durgapur, Rourkela, IISCO), RINL’s Visakhapatnam Steel Plant, and select private sector clients. MJunction’s auction calendar tends to be dense in the October–March period when plant maintenance shutdowns generate surplus material. The platform’s buyer interface is broadly similar to MSTC’s but requires a separate registration; being registered on one does not confer access to the other.

Private Sector Auctions

Beyond MSTC and MJunction, large private manufacturers — automotive OEMs, petrochemical complexes, cement plants — run their own scrap tenders through third-party e-procurement platforms such as SAP Ariba, Coupa, or in-house portals. These tenders are typically notified on the company’s vendor portal or through direct intimation to empanelled buyers. Getting onto the approved vendor list of an automotive OEM — where press shop scrap (high-grade HMS or specific alloy steel drops) can be exceptionally valuable — requires GST registration, a track record, and sometimes a third-party quality audit. The commercial terms are tighter but the material quality is consistently superior.

Registration, EMD, and the Documents You Cannot Afford to Miss

Registration on MSTC or MJunction is the entry ticket, and buyers are often surprised at how straightforward it is — provided their documentation is in order. For MSTC, the mandatory documents are: a valid GST registration certificate, a PAN card, a cancelled cheque for the bank account to be used for transactions, and a self-attested identity proof for the authorised signatory. Companies must also provide a copy of their Certificate of Incorporation or Partnership Deed. The registration process is entirely online and typically approved within 3–5 working days.

The Earnest Money Deposit (EMD) is the mechanism that filters serious bidders from speculators. On MSTC, EMD is typically set at 5–10% of the estimated lot value, which can translate to ₹50,000 to ₹5 lakh or more for significant lots. EMD must be submitted via RTGS/NEFT or through MSTC’s integrated payment gateway before the bidding window opens — there are no exceptions. If your bid is unsuccessful, the EMD is refunded within 7–10 working days. If you win and fail to complete payment, the EMD is forfeited and your account may be suspended.

GST and HSN Code Compliance

Every scrap purchase through a formal auction attracts GST. Ferrous scrap (MS scrap, cast iron) falls under HSN 7204 and attracts 18% GST. Non-ferrous metals carry varying rates — copper scrap (HSN 7404) and aluminium scrap (HSN 7602) also attract 18%. Critically, under the GST reverse charge mechanism applicable to scrap transactions where the seller is unregistered or a non-dealer, the buyer may be liable to discharge GST. On PSU platforms, the selling PSU is almost always GST-registered and will raise a tax invoice, but buyers must confirm this before lifting material. The GST portal maintains the updated HSN classification and rate schedule.

The Bidding Process: From Lot Inspection to Winning Bid

Before any bid is placed, serious buyers conduct a physical inspection of the lot. This is not optional. MSTC auction notices typically specify one or two inspection dates at the seller’s premises — a railway yard in Nagpur, a steel plant in Visakhapatnam, a port trust godown in Mumbai. Inspection allows you to verify the actual weight and grade of the material against the lot description, assess contamination or mixing (a common issue in multi-material lots), and evaluate lifting access and logistics feasibility. Bidding blind on the lot description alone is one of the most expensive mistakes in this business.

The e-auction itself runs on a scheduled time window — typically 30 minutes to 2 hours — with an auto-extension feature: if a bid is placed in the final few minutes, the window extends by a fixed period (usually 5 minutes) to prevent last-second sniping from distorting price discovery. Bidders can see the current highest bid (though not the identity of the leading bidder) and increment upward in defined bid steps. The reserve price is set by the seller and is not disclosed; the auction simply does not conclude at a valid sale unless the highest bid crosses it.

Once your bid is declared the highest and the auction closes, MSTC issues a Letter of Acceptance (LOA). You then have a defined window — usually 7–14 days depending on the seller’s terms — to pay the balance of the lot value (after adjusting the EMD already deposited). Payment is via RTGS/NEFT directly to the seller’s account in many cases, or through MSTC’s escrow mechanism. Only after full payment is the Gate Pass or Delivery Order issued for material lifting.

Payment, Lifting, and Logistics — Where Most Buyers Stumble

The lifting period — the time allowed to physically remove purchased material from the seller’s premises — is where auction winners frequently face operational difficulty. Lifting periods for large lots range from 15 to 45 days, and extensions, if granted at all, attract a ground rent or demurrage charge of ₹500–₹2,000 per tonne per week depending on the seller’s policy. At a SAIL plant or a major port trust, demurrage disputes are common and can erode the margin on an otherwise well-priced auction win.

Transportation logistics require advance planning. For large lots — 50 tonnes and above — you will need to arrange dedicated trucks or rakes (for railway scrap, in-plant siding access may be available). Weigh-bridge slips issued at the seller’s premises are the basis for final weight reconciliation; any discrepancy between the auctioned estimated weight and the actual lifted weight is settled post-lifting, either as a refund or an additional payment. Retain all weigh-bridge receipts, Gate Passes, and e-way bills — these form the audit trail for your GST input tax credit and for any future regulatory scrutiny.

For businesses looking to resell purchased scrap or process it further, understanding the ferrous and non-ferrous metal recycling value chain is essential to correctly pricing bids and identifying downstream buyers before the auction closes.

Regulatory Guardrails: Three Rules Every Scrap Buyer Must Know

Participating in a factory scrap auction is not simply a commercial transaction — it carries legal obligations that many small buyers underestimate until enforcement action arrives.

1. The Hazardous and Other Wastes (Management & Transboundary Movement) Rules, 2016

Notified by the Ministry of Environment, Forest and Climate Change (MoEFCC), these Rules govern the handling, storage, transport, and disposal of hazardous waste categories. Schedule I of the Rules lists processes generating hazardous waste; Schedule II lists constituents that make waste hazardous. Industrial scrap from chemical plants, refineries, electroplating units, and battery manufacturing facilities may carry residual hazardous contamination. Under Rule 4, only authorised facilities may handle such waste. A buyer lifting contaminated scrap without appropriate authorisation from the relevant State Pollution Control Board (SPCB) faces penalties under the Environment (Protection) Act, 1986, including prosecution. Before bidding on any lot from a chemical, pharmaceutical, or electroplating plant, verify the waste classification and your own authorisation status.

2. The E-Waste (Management) Rules, 2022

Where auction lots include condemned electrical or electronic equipment — transformers, motors, switchgear, computers, UPS systems — the E-Waste (Management) Rules, 2022 apply. These Rules, enforced by the Central Pollution Control Board (CPCB), require that e-waste be channelled only to CPCB-authorised dismantlers and recyclers. A buyer who purchases condemned electrical equipment at a PSU auction and resells it to an unauthorised scrap yard is in breach. The Rules also impose Extended Producer Responsibility (EPR) obligations on producers, but for buyers the key compliance point is the downstream disposal chain. Insist on a Certificate of Recycling from an authorised recycler; CPCB’s enforcement of the 2022 Rules has intensified through 2024-25, with show-cause notices issued to multiple industrial units for undocumented e-waste movement.

3. The Metals and Minerals Trading Corporation and Scrap Import Rules under DGFT

For buyers who import scrap or deal in imported material alongside domestically auctioned material: the Directorate General of Foreign Trade (DGFT) regulates scrap imports under specific HS codes, and the Steel Scrap Recycling Policy 2019, notified by the Ministry of Steel, sets quality standards for domestically collected and recycled steel scrap under BIS norms. IS 10006 (for steel scrap grades) issued by the Bureau of Indian Standards (BIS) is the reference standard for grading MS scrap in formal tenders. PSU sellers typically specify lot grades in line with IS 10006 categories; understanding these grades is essential to accurate bid valuation.

Auction Rate Benchmarks: What Industrial Scrap Is Fetching in 2025

Reserve prices in PSU factory scrap auctions are typically set with reference to prevailing market rates, LME benchmarks for non-ferrous metals, and the London Metal Exchange monthly averages. Winning bids in competitive auctions often exceed reserve by 5–20%, particularly for non-ferrous lots where multiple buyers are registered. The table below reflects indicative auction winning bid ranges observed across MSTC and MJunction platforms in Q1 2025; actual rates vary by location, grade, and lot size.

Scrap Category	BIS / Common Grade	Indicative Auction Rate (Q1 2025)	Primary Sellers
Mild Steel (MS) Scrap	IS 10006 Grade 1 / HMS	₹33–₹38 / kg	SAIL, Railways, PSU factories
Cast Iron Scrap	CI Borings / CI Solids	₹26–₹31 / kg	Foundries, engineering PSUs
Copper Scrap (mixed)	Cu ≥ 85%	₹530–₹570 / kg	Power utilities, BHEL, defence
Aluminium Scrap (mixed)	Extrusion / casting alloy	₹145–₹170 / kg	Automotive OEMs, aerospace
Stainless Steel Scrap	Grade 304 / 316	₹95–₹120 / kg	Pharma plants, dairy equipment
Condemned Electrical Equipment (e-waste category)	Transformer / motor lots	₹18–₹28 / kg (blended)	Power utilities, defence, PSU offices

These figures are indicative benchmarks — not guaranteed prices. Rates fluctuate with LME copper and aluminium spot prices, domestic steel demand, and monsoon-driven logistics costs. For MS scrap specifically, Mumbai and Pune yards tracked ₹33–₹38/kg in Q1 2025, largely consistent with the previous quarter. Non-ferrous rates are far more volatile and should be cross-checked against LME closing prices on the day of bidding.

The 7-Step Compliance Checklist Before You Bid on Any Industrial Scrap Auction

Compliance failures in scrap auctions are rarely dramatic — they accumulate: a missed GST reconciliation, an unlicensed transport contractor, an authorisation gap for a hazardous sub-category. The checklist below is designed for plant managers, procurement leads, and small scrap trading businesses preparing to participate in their first or next industrial scrap auction.

1. Verify your GST registration is active and your HSN codes are correctly mapped to the scrap categories you intend to purchase (HSN 7204 for ferrous, 7404 for copper, 7602 for aluminium). Check your registration status on the GST portal before the auction date.
2. Complete MSTC and/or MJunction buyer registration with all required KYC documents at least 10 working days before the auction — processing queues are longer during peak auction seasons (October–March).
3. Classify the lot material against Schedule I and Schedule II of the Hazardous and Other Wastes (Management & Transboundary Movement) Rules, 2016. If the source plant is a chemical, pharmaceutical, battery, or electroplating unit, obtain a written declaration from the seller on waste classification.
4. Attend the physical inspection and document observations (photographs, weight estimates, visible contamination) before placing your bid. Never bid on a lot you have not personally or through an agent inspected.
5. Arrange your EMD funds in the bank account linked to your MSTC/MJunction profile at least 48 hours before the auction — intra-bank RTGS clearing delays have caused EMD rejections.
6. Pre-arrange transportation and weigh-bridge access so you can begin lifting within the stipulated period post-payment. For lots above 20 tonnes, book truck capacity before the auction closes, not after.
7. Ensure your downstream recycler is CPCB-authorised for the relevant waste category — particularly if the lot includes e-waste, oil-contaminated metal, or battery components. Obtain a Certificate of Recycling for your records; this is increasingly required for BRSR sustainability disclosures under SEBI’s framework.

For businesses disposing of scrap (rather than buying it), our guide on the full range of scrap categories we purchase is a practical starting point for valuation and compliance planning.

Related Articles

• Bulk Scrap Buyers in India: How to Negotiate the Best Price
• India’s Vehicle Scrapping Policy: What Businesses Need to Know
• Setting Up In-House Waste Segregation: A Practical Guide

Frequently Asked Questions

Who can participate in a government factory scrap auction on MSTC?

Any individual, partnership firm, LLP, or private/public limited company with a valid GST registration and PAN can register on MSTC Ltd’s platform as a buyer. There is no minimum turnover threshold for buyer registration, though individual sellers (PSUs, government departments) may impose their own vendor qualification criteria — such as a minimum net worth or prior experience certificate — in specific tender notices. Registration costs ₹590 including GST, and the process is completed online at mstcindia.co.in.

What is the EMD in a scrap auction and is it refundable?

The Earnest Money Deposit (EMD) is a pre-bid security deposit — typically 5–10% of the estimated lot value — that demonstrates a bidder’s financial seriousness. If your bid is unsuccessful, the EMD is refunded within 7–10 working days post-auction. If you win and fail to complete the balance payment within the stipulated period, the EMD is forfeited and your account may be debarred. For high-value lots (copper or aluminium lots above ₹10 lakh), the EMD itself can be ₹50,000–₹1 lakh, so ensure liquidity before bidding.

Are there restrictions on lifting scrap from chemical or power plants?

Yes. The Hazardous and Other Wastes (Management & Transboundary Movement) Rules, 2016 — enforced by the Central Pollution Control Board (CPCB) and State Pollution Control Boards — require that any scrap carrying hazardous characteristics (such as transformer oil-contaminated metal, battery scrap, or chemical plant residues) be handled and transported only by authorised parties. Lifting such material without SPCB authorisation constitutes an offence under the Environment (Protection) Act, 1986, and penalties can include prosecution of company directors. Always request a material safety declaration from the seller before bidding.

How is GST applied when I purchase scrap through a PSU auction?

When a PSU or registered government entity sells scrap through MSTC or MJunction, the seller raises a GST-compliant tax invoice at the applicable rate — 18% for ferrous scrap (HSN 7204) and most non-ferrous categories. As the buyer, you pay GST as part of the invoice and can claim Input Tax Credit (ITC) against it, provided you are a GST-registered dealer and the scrap is used in the course of your taxable business. Verify the seller’s GSTIN on the invoice before filing your returns. The GST portal’s HSN search tool confirms applicable rates by category.

What documentation should I retain after completing a scrap auction purchase?

Retain the following for a minimum of 5 years (as recommended under GST record-keeping norms) and as required under the Hazardous and Other Wastes Rules, 2016, which mandates a 2-year minimum for hazardous waste movement records: the Letter of Acceptance (LOA), the seller’s tax invoice, weigh-bridge slips, e-way bills for all consignments, the Gate Pass / Delivery Order, and — where applicable — the Certificate of Recycling from your downstream recycler. These documents also form the evidentiary basis for BRSR sustainability disclosures if your company is a listed entity subject to SEBI’s reporting requirements.

Work With The National Recycling Corporation

The National Recycling Corporation is a Mumbai-headquartered, pan-India scrap trading and recycling company with operations across Maharashtra, Gujarat, Karnataka, Telangana, Tamil Nadu, and Delhi-NCR. We work with industrial units, PSUs, manufacturing plants, and scrap buyers at every stage of the factory scrap lifecycle — from auction participation advisory to bulk procurement, downstream recycling, and regulatory compliance documentation.

For buyers who have won factory scrap auctions and need a reliable downstream partner, we offer CPCB-authorised disposal channels for e-waste and hazardous-category scrap, GST-compliant invoicing, and Certificates of Recycling or Destruction that satisfy BRSR-grade documentation requirements under SEBI’s sustainability reporting framework. Our pricing for ferrous and non-ferrous scrap is benchmarked against LME monthly averages and domestic market indices, ensuring transparent and defensible valuations.

For factories and industrial units looking to dispose of accumulated scrap — whether through auction or direct sale — we provide pan-India pickup logistics, accurate lot valuation, and full compliance support under the Hazardous and Other Wastes (Management & Transboundary Movement) Rules, 2016 and the E-Waste (Management) Rules, 2022. To learn more about our services or to schedule a site assessment, contact us directly. You can also explore our full-service industrial waste dealing capabilities and our dedicated ferrous and non-ferrous metal recycling services.

• Pan-India pickup and logistics coordination for auction-grade and surplus scrap
• CPCB-authorised downstream recyclers for e-waste and hazardous-category material
• GST-compliant invoicing with full HSN code documentation
• Certificate of Recycling / Certificate of Destruction for each consignment
• BRSR-grade sustainability documentation for listed and ESG-reporting clients
• Fair-market pricing for MS, CI, copper, aluminium, stainless steel, and brass scrap
• Compliance advisory for auction participants bidding on complex or mixed lots

Sources and References

• MSTC Ltd — Government of India e-commerce and auction platform (Ministry of Steel)
• Ministry of Steel, Government of India — Steel Scrap Recycling Policy 2019
• Central Pollution Control Board — Hazardous and Other Wastes (Management & Transboundary Movement) Rules, 2016
• Central Pollution Control Board — E-Waste (Management) Rules, 2022
• Ministry of Environment, Forest and Climate Change — Environmental legislation portal
• Goods and Services Tax Network (GSTN) — HSN code and rate finder
• Bureau of Indian Standards — IS 10006: Steel Scrap Grade Standards
• London Metal Exchange — Copper and Aluminium spot price benchmarks