Banc Sabadell | Following last week’s railway accident in Adamuz, the Minister of Transport has ordered the CIAF (Railway Accident Investigation Commission) to locate all batches of the same rail in case the cause of the breakage was due to a manufacturing fault.
The same sources specify that virtually all the rails used in Spain are manufactured by ArcelorMittal (MTS), including those involved in the accident. ArcelorMittal has indicated that investigations should continue and no assumptions should be made, and that its work processes comply with the highest quality controls.
Assessment: This is negative news due to the noise it may generate, but we believe that the financial impact should be limited as it is a minor contract. At the sector level, the manufacturing process controls the characteristics of the resulting cast material and subsequent checks eliminate the risk of cracks, which reduces the risk associated with these problems.
