Even as steel continues to dip another 3.4% over the last two weeks or 27% since peaking in late March, scrap catalytic converter values continue to rise with the strength of the Platinum Group Metals (PGMs). Palladium itself up over $200 since last month rising for a fifth straight week as of the writing of this article, July 10. Industrial demand is strong especially in Asia as it increases the use of PGMs in auto catalyst to meet the China 6 emissions requirements. Investor sentiment is positive.
Don’t Become an Easy Target
When steel prices are low, it affects every recycler. It affects the bottom line, but it also affects the psyche. Low steel prices make you think twice about buying more cars. It also makes you think about selling more products for cash. Beware. Your need for cash also makes you an easy target for being taken advantage of. When converter values are high, and companies know you need cash, it is a good time for your margins to go down and their’s to go up. Offering you a high price across the board ($90 – $100 / unit) may look attractive at the time you need the money, but what if you are leaving too much on the table (another $10 – $15 / unit)?
Get All the Money from Your Converters
How much money do you want from your converters? Your answer should be, all of it. How do you get all the money from your converters? Sell them on Assay or recovery (An assay is a test result from a sample that, if done correctly, yields the highest result.) The amount of money you can get from an early payment is likely equal to the amount your being offered to sell them out the door for cash. The balance or final payment is the amount you could be giving up by selling them for cash or for an across-the-board price. With processing and refining companies like ours, United Catalyst Corporation, you can get an early payment within the first week of arrival and the balance within 30 – 45 days.
A Revenue Stream that Keeps You Going
In good times or bad, converter revenue is a source of income you can depend on. Even with PGM prices fluctuating, you can keep selling product into the market and take advantage of dollar-cost-averaging. There is no need to speculate (or gamble) on the metal prices. Just sell, sell, sell. If done with a reputable company, you will find you sold throughout the year at the average price for all three metals (Platinum, Palladium, and Rhodium) that year.
Today Almost Anyone Can Sell Converters on Assay
It used to be that to work with a converter processor on refining terms, you needed to have huge volumes. Today, thanks to the work companies like United Catalyst Corporation are doing, processing and refining is becoming more accessible to individual automotive and scrap metal recycling companies regardless of their size and converter volume. We believe every recycler should be entitled to get the most from their converters. Ask companies what the minimum lot size is to sell on assay. At United Catalyst Corporation it is 100 converters. And your assay is from your lot of converters. The sample is properly collected, tested, and never co-mingled with another recycler’s converter lot sample.
The 4 Ps of Converter Recycling Profitability
In an industry that has historically been rife with smoke and mirrors, as recyclers looking to get the most from your converters, you need a Process, a Program, and a Partner you can trust, and you need to learn the Power of Education.
- A Process. You can sell on assay instead of selling by the piece. You will need to be paid on a sample and assay that are official, accurate, and verifiable.
- A Program. You need to be able to get money when you need it to run your business. Getting you the most money from your converters shouldn’t mean you have to wait until you have a truckload or can hold out for 3 months to get paid. If you can afford to do this, you may pick up a point or two more.
- A Partner. Selling scrap catalytic converters has always been a risky business. Taking a price on something where the value is unknown screams “seller beware.” Selling on assay or recovery helps to eliminate that problem because there is a test result that can be considered the basis for the sale. However, even with this method, several things can still go wrong: settling on an inaccurate or manipulated sample and/or assay result; losing weight during processing and refining; having too much trash and/or moisture; paying exorbitant recycling costs; and selling metal that is too heavily discounted. For all these reasons, the importance of working with a Partner you can trust cannot be overstated.
- The Power of Education. At United Catalyst Corporation we believe that an educated recycler is our best customer. In fact, we give you an education in auto catalyst processing and precious metals refining. We take a complex process and try to make it understandable and easy to use. We know that once you learn about your converters and your yard profile, you will increase your profits, and no one will ever be able to take advantage of you again.
To learn more about selling converters on assay or to read other articles in this series, please email me at Berube@unitedcatalystcorporation.com or call us at 864-834-2003.
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 firstname.lastname@example.org.