Why Online Scrap Catalytic Converter Price Catalogues Can Be Misleading
As a scrap catalytic converter supplier, knowing how much your materials are worth is always a concern. However, fluctuating Platinum Group Metal (PGM) prices and the sheer number of vehicle makes and models make it difficult for most collectors to keep abreast of the latest scrap converter prices.
Are Price Catalogues Really Reliable?
Hence, it is no wonder that so many suppliers and scrapyards rely on online price catalogues for price reference. Some catalogues give a price range by category, while others indicate a specific price for each model. While convenient, these catalogues do have some limitations.
Given the number of car brands and their respective models released in the world, it would be difficult for any converter price list to include all the converters in the world. Even if it did, it would not be feasible to update it frequently, simply because it takes too much effort, which brings us to the next limitation – frequency of updates, or lack of.
Due to the tremendous amount of effort required for frequent updates, it is common for most sellers to update their catalogues every few months or longer. In light of fluctuating PGM prices, this would mean that most catalogues do not reflect the true value that your converters hold. Depending on which way the market is heading at the time of the sale, this may not work to your advantage if you are selling your converters based on catalogue prices that were updated during a bearish market.
Here an example:
The chart above shows the movement in Platinum prices over a 6-month period, courtesy of Infomine.
In a span of 6 months, Platinum moved between roughly 870 USD/ozt to 1130 USD/ozt. That’s a whopping 30% price difference!
Why does this matter? If we assume that the catalogue was published in November 2017, and the converters were sold in late January 2018, the prices based on the catalogue would be much lower than the true value of the converters. In January, most collectors would be more than happy to buy from you at catalogue prices, and you would be losing out on the potential profit without even realizing it.
What if the situation was reversed?
Let’s say the catalogue was published at the peak of Platinum prices in January, the prices would be much higher than the true value of your converters in late February as Platinum prices have dropped significantly.
In this situation, some collectors may still quote based on catalogue prices in the hope of luring you to send them your scrap converters. We have heard stories whereby sellers were first quoted high catalogue prices, and subsequently arranged for delivery of the goods to the buyer. Upon receiving the goods, the buyer gave some excuses to lower the prices. Having already delivered the goods, sellers either had to accept the new prices or retrieve the goods, making losses on the delivery charges.
In some other cases, the buyer goes through with the deal at the agreed price, pays a deposit to the seller, but subsequently withholds part of the remaining payment.
These are just some real-life horror stories on how sellers have lost out by relying on catalogue prices. To avoid these situations, we recommend working with a reliable and professional collector.
How Do Professional Collectors Price Converters?
Professional collectors price converters based on current PGM market prices. They either use the formula below or a variant of it.
[PGM Content * PGM Market Price] subtract
[Logistics + Processing + Refining + Financing Costs]
- PGM Content
Professional collectors have a comprehensive and updated database of converters worldwide, complete with photos, records of their serial number and how much Platinum, Palladium and Rhodium can be found in it. Serial numbers are used in identifying converters and thus play a crucial role in pricing.
- PGM Market Price
This would be the price of Platinum, Palladium and Rhodium on the day the enquiry was made. Should a duration of time lapse between enquiry and actual purchase, adjustments can be made so both parties get a fair deal.
These are the fees incurred for packaging and transportation of the materials to the buyer’s location.
- Processing Costs
These are charged by the buyer for processing converters into finely grounded, homogeneous ash, which is required for accurate sampling and assaying.
- Refining Costs
These are fees charged by the refinery for the final extraction of the PGM from the processed converter ash.
- Financial Costs
These are financial fees incurred on pre-payments to sellers to ease their cash flow. Financial costs also include fees incurred in the trading of the refined PGMs.
Since the prices that professional collectors quote are based on PGM market prices, their prices reflect the true value on your converters scrap at the time of the transaction, i.e. lower when PGM prices are low, and higher when PGM prices are high.
And since they largely use the same formula to calculate prices, the price levels you get should be similar across collectors. Food for thought – if a collector does quote you an unusually high price, do take time to pause and think:
- Will they actually turn up to collect your converters?
- Will they change their prices upon delivery?
- Will you risk not getting full payment?
Other Important Factors to Consider
Besides price, some other (equally important) factors to consider are payment terms and the collector’s track record.
The earlier a buyer can pay you, the better your cash flow, and the faster you can collect a new batch of converters to sell again. This is especially important to maximize profits when PGM prices are favourable.
Also, doing some background checks on your buyer can also lower your risks of dealing with someone unscrupulous. If you have friends who have been in the PGM recycling industry longer than you have, ask them regarding the buyer’s reputation. In a niche industry like ours, it is very likely that they have information to share with you.
To sum it all up, being overly reliant on catalogue prices has its risks, and price should not be your only consideration. If you are looking to do PGM recycling long-term, finding a reliable and professional partner, who would pay on time and buy regardless of where the market is going, is more important than going with the highest offer.