Selling Basics and Advanced Principles

Selling Basics and Advanced Principles

For those of us who travel to conferences and trade shows with recyclers, it is one of the busiest times of the year. It is also the time when we get to do the most educational training sessions. Personally, if I could, I would travel all year educating recyclers on developing a profitable converter recycling program. We educate for two reason: First, so that you make the most money you can from selling your converters. Second, so that you cannot be taken advantage of when selling them.

Selling units in person or by software application.
Whether you sell by the unit in person or by application, the buyer normally turns around and sells the units on recovery by assay for a higher value. Oftentimes, a grading application cannot accurately predict the value of the load of converters will yield on assay. There is a significant potential margin of error with converter applications.

Selling units by bid or across-the-board pricing.
In our estimation this is like rolling the dice, sometimes you win, sometimes you lose. If your converters are of lower value than the price offered, you win; if your converters are of higher value, you lose. In most instances, like selling by the piece or bid, the converters are being turned around for a higher value on assay. Margin is left on the table.

No two converters the same.
If you were to take two converters coated on the same day for the same vehicle application, and you sold two identical cars to two neighbors who worked at the same plant each day, who’s vehicles after 10 years were destroyed by the same flood, and test those two converters by assay, the converter values would not be the same. This is one of the main reasons to sell converters on assay. No two converters are the same.

Selling converters by assay.
There is only one way to recycle a scrap catalytic converter. Destroy it. Sample it. Refine it. Sell the Platinum, Palladium, and Rhodium. Simple in theory, but more complicated in practice. More involved, but more profitable if you understand how it works.

Dismantle.
Each recycler believes they know the average price per unit that was sold. If you don’t know your count before you sell and if you don’t confirm your count with your processor, then you cannot know your true average. The price per unit can be manipulated in several ways by over or under estimating the units which skews the average. Average Price Per Pound and Pounds Per Unit. Mass balance all weights.

De-can. Mill.
When converters are destroyed by de-canning and milling the result is catalyst and dust. It is important that you, the customer, receive all the catalyst and dust. These two items become the gross weight of your load that will be sampled and paid for. There is also the steel from the cans and the packaging materials that need to be accounted for in a mass balance. All weights in to all weights after processing should roughly add up to 99.5 percent. A loss of no more than 0.5%.

Sample.
How a sample is collected is one key to determining the accuracy of an assay result. The sampling method should be verifiable and accurate. Moisture and inert material like insulation should be reasonable. The normal range for both is 1 – 3 percent. The weight before the moisture is determined is the net wet weight, after the moisture, is the net dry or settlement weight. Your price per pound can be manipulated. The less weight, the higher the average weight per pound. BUT, if you are missing weight, you are missing money. Track your average pounds per unit to check this. Late model yards might have an average weight per unit of 1.8 – 2.0 lbs. per unit; other yards might have an average of 2.0 – 2.3 lbs.

Assay.
How your sample is assayed to determine the amount of metal contained is another key to proper settlement. The most reliable method for determining the precious metals contained in auto catalyst is fire assay combined with induction coupled plasma (ICP) spectroscopy and an atomic absorption (AA) digestion. It is not the norm to settle on x-ray fluorescent (XRF) analysis. The margin of error for this method can be plus or minus 10% in some instances.

Where the assay is performed and by whom is paramount to getting paid the most. For instance, you should know if the assay is performed at the processor’s lab, the refiner’s lab, or by an independent third-party lab. We prefer to settle with recycler’s not on our lab analysis but on the “sample of record” at the end refiner or with an independent third-party lab. We consider the results at our lab to be quality control, not the final assay, for the final settlement.

Market prices.
Recently, I was asked about the spread on market prices between what is published and what is received on your invoice. There are several factors that affect the spread or discount we receive on market prices for metals. First, there is a discount for delivering industrial grade metal versus investment grade metal. Second, there is a discount for when metal will be delivered: today, 30, 60, 90, 120 days. The converters you recycle today will not be in metal form for at least 84 – 90 days. See diagram. This means we sell metal forward and that price is discounted. Locking in a metal price early carries a lease rate or discount. Taking money early carries a finance charge. These charges are typical in assay-based selling whether you see them or not. Finally, if the metal is in short supply at the refiner, the spread or discount is also higher because the refiner is being charged a higher lease rate to get metal. This has been the case for Palladium most recently.

In converter recycling, the best recyclers are partnering with companies that educate. At our company, we believe selling on assay with refining terms is the best way to recycle scrap catalytic converters. Learning the way assay and refining works and how to avoid unethical trading practices takes time, but if done properly with a reliable recycling partner, yields much greater value.

Get the most for your converters with a process you can trust. For questions or copies of this article or previous articles, go to www.unitedcatalystcorporation.com.


Becky Berube serves the recycling community as President of United Catalyst Corporation, Co-Chair of the Automotive Recycling Association’s Events Advisory Committee, and is an ExCom Board Member of the International Precious Metals Institute. She can be reached at 864-834-2003 or by email at berube@unitedcatalystcorporation.com.