Five years ago, converter apps weren’t even a thing, whereas now, converter pricing apps are as common as muck and trust us when we say, some are just that…muck. Truth be told, not all apps are built equally and to understand the real issue would mean understanding the golden rule of converter assaying: the only way to determine the precious metal content of a converter is to dismantle it and analyze it in a laboratory with the proper methods and equipment.
Although lot sizes are shrinking (depending on the processor), there is no way to reliably know how much an individual converter is worth in each assayed lot. Many companies that manage recycled converters (that switch over to assay after selling by unit) have a hard time ditching the “per unit price mentality”. Moreover, there are three big hurdles propagated by these pricing apps that converter recyclers must learn to overcome.
Value by Unit
When comparing PMR’s database against another toll refiner that is using acceptable industry standards, some units will return higher and some lower. In the end, whether our pricing app is up $100 or down $100 for a serial number, it means nothing—because the supplier will always be paid based on the true value of that unit. Toll-refiners are not paying you for each converter by code, we are paying you based on the total ounces of Platinum, Palladium, and Rhodium extracted per shipment.
Selling on assay means never knowing what each converter unit yielded you, and never being paid by serial number/unit. At present, no toll-refiner can deliver better than the above, unless each unit is analyzed separately. While hypothetically not impossible to do with present processing techniques, this is not scalable or even remotely timely. In short, current technology simply does not exist to offer this level of accountability.
The App that Doesn’t Buy
One of the biggest red flags for a converter app today would be if the company offers information but does not purchase converters. Please stay away. People that are producing apps may have the ability to create and offer a product in the “App Store,” but some questions to ask yourself are the following: Do they have any converter knowledge? Do they have specialized catalyst laboratories to develop that knowledge? If the answer is no to any of the above, you are in trouble. PMR has been developing our database of converters for over 20 years and it takes time and specialized knowledge to develop this type of tool.
Most importantly, these apps are being sold as informative—with ZERO accountability when it comes to accuracy. In fact, they are sold to prospective users as accurate buying guides, when in reality, they do not buy converters themselves.
Definitive Value by Code
Converter pricing apps (or at least the good ones that show value by serial number) are designed to help purchase not sell material. This is particularly true of apps offered by toll-refiner processors delivering assay-based returns. Unfortunately, there are inexperienced buyers out there that don’t fully understand, that serial number evaluations of converters are rough estimates of the final refined value. Each converter lives its own life after it is installed on a new vehicle and no two converters are created identical. Experience dictates that there is a minimum of a 15% recycled value swing +/- when considering all of a converter’s use factors.
That being said, what the app trap is doing is perpetuating a misconception that converters have a definitive individual unit value—which, ultimately, is false. Even if someone were selling converters to a buyer exceptionally by serial number, this would result in an even bigger discount being taken off of the end value. No buyer who is still in business (or in a right frame of mind), will willingly overpay, knowing that the final evaluation comes from toll refining in larger lots.
In fact, the buyers that actually are overpaying in this way are significantly reducing their profit margins. Furthermore, if they are making money, it is most likely, solely, due to an up-trending market.
So, how to avoid the “App Trap?”
Work with a reputable toll refiner that has been in business for over 10 years and can offer a real database to assist you with understanding converters. Realize that you will never know the actual value of a single unit mixed in with 500 to 1000 others. Rely on information as a guide, not as an absolute certainty — and depend on assay history to be the true guide in your purchasing. True buyers who have a future in this business understand that converters work on averages — not on whose app says individual units are worth more. Once a buyer understands this, they can be successful, well and beyond the latest and greatest “Cat App”.