Three reasons why you shouldn’t ignore your catalytic converter operations.
By Joelle Boivin
If you’re recycling nonferrous metals in today’s market, you might be struggling to give your converter operations the attention they truly deserve. With low industry volumes and volatile market trends, we understand why recycling companies are choosing to turn their focus away from converters. The truth is, however, that your converter recycling ventures are still very profitable.
To prove it, we put together three reasons why you shouldn’t overlook your catalytic converter operations. So, if you’re ready to get all the answers, keep reading!
REASON 1: Converter Recycling is a Highly Profitable Business
For those watching precious metal prices, we understand that it might seem as if converter recycling isn’t as profitable as it used to be. But we’re here to prove that it’s just a misconception. Let’s explore precious metal market prices and unit values from 2017 to 2023 to prove it.
Platinum Group Metals & Their Market Prices from 2017 to 2023
Converters are valuable because they contain platinum, palladium, and rhodium. To understand why converters remain a profitable recycling venture, let’s examine the prices for these precious metals through the years.
Platinum Bound
The average price for platinum in 2017 was $948.86 per troy ounce and dropped to $880.53 by 2018. By the end of 2019, platinum had an average price of $863.02 with drops as low as $785 throughout the year.
In 2020, the average price for platinum was $882.63 and jumped to an average of $1,092.74 in 2021 due to a rebound in demand after the pandemic. In 2022, platinum saw prices as high as $1,151 and lows of $831 and finished the year with an average of $960.51. With a handful of weeks left in 2023, platinum had an average of $973.97 by early November.
Despite low industry volumes and market volatility, precious metal and converter unit prices have seen an uptick in value.
The data shows that platinum remained a profitable metal from 2017 to 2023. We’ve also noticed that platinum has a higher market value now than it did in 2017, despite recent fluctuations in prices.
What About Palladium?
In 2017, palladium ended the year with an average of $1018.71. In 2018, palladium had a yearly average of $1,028.40 and climbed to $1,536.74 in 2019.
2020 and 2021 were exceptional for palladium because of unforeseen factors, such as the pandemic. Prices averaged at $2,192.54 in 2020 and $2,397.15 in 2021.
In 2022, palladium had an average value of $2,114.18. As of 2023, palladium has an average of $1,392.61, with highs reaching $1,802 and lows dropping to $1,101.
These metrics prove that palladium experienced a price surge during the pandemic, but prices remain higher than they were in 2017.
Rhodium Focus
Rhodium finished 2017 with an overall average of $1,012 and surged to $2,052 by the end of 2018. In 2019, rhodium climbed even higher, averaging $3,605 and by 2020, it more than doubled to an average of $8,710.
With unprecedented market realities affecting the metal, rhodium rose to an average of $18,074 in 2021. In 2022, rhodium had an average of $14,310. In 2023, rhodium had an average of $6,054 per troy ounce.
These statistics demonstrate that rhodium’s price is six times higher now than 2017. Despite a never-before-seen market reality during the pandemic, rhodium remains a valuable precious metal.
What Does That Mean for Converter Prices?
In 2017, low grade foreign units were worth approximately $50. Fast forward to today, and these units are fetching around $81. Higher grade converters are now worth $100 a piece. That means prices are twice as much as they were six years ago, despite decreasing industry volumes and volatile market trends.
Catalytic converter recycling businesses are still profitable today, both long term and short term. Companies that were earning $69.03 for a mixed lot of 100 converters in 2017 are now getting $91.18 converters in 2023.
Other converter recyclers have seen a similar trend, with the value of a mixed lot of 100 converters increasing from $77.97 in 2017 to $101.67 in 2023. This equates to an approximately $23 increase per lot over a six-year period.
It’s for this reason that converter recycling remains a highly profitable venture. Despite low industry volumes and market volatility, precious metal and converter unit prices have seen an uptick in value. By giving your converters the attention they deserve, you can tap into an additional revenue stream that can significantly benefit your business.
REASON 2: Any Extra Revenue That Comes to Your Business is Essential
In a business landscape where industry volumes are decreasing and consolidation trends are looming, any opportunity to maximize your revenue is a chance to gain an edge. We understand that some companies prefer sticking to traditional strategies that worked in the past, but embracing new approaches can set you ahead of the competition.
Capturing opportunities to make extra revenue starts by having a processing partner that helps you achieve your goals. Your partner should provide low lot requirements and fast turnaround rates that assists you in shipping converters and receiving quick payments.
This way, you’ll be able to reinvest your capital into what really matters: growing your enterprise and capturing more market share.
In this business, getting a competitive edge is critical. That’s why you should be doing everything you can to capitalize on every facet of your business.
We understand, though, that converter recycling in today’s market seems like a risk. That’s why we’re giving you the insights you need to continue your converter ventures with confidence.
REASON 3: You’ll Exceed Your Goals with the Right Processing Partner
A processor that adapts to your unique needs can help you thrive in any market. But how do you know if you’re working with the right processor? Here’s what you should look for to help you mitigate risks in your converter business.
Low Lot Requirements
You should be getting flexible lot requirements that allow you to ship as frequently as you want. This helps you capture market trends that meet your needs before the market changes again, helping you get a steady revenue stream all year round.
Flexible lot requirements also allow you to ship smaller lots and get separate assay results, helping you get a strong understanding of your material composition, profitability, and real time insights for each location.
You should also benefit from transport solutions that streamline your operations. Your processor should have brokerage partnerships or economic transport solutions that collect your converter lots from each yard. This way, there’s no need to consolidate your material at a single location to send for assay.
Rapid Turnaround Rates
Quick turnaround times help you capitalize on your material and reinvest your dollar into your business quickly. Your processing partner should offer a turnaround rate that helps you grow your enterprise that much faster.
A rapid turnaround should give you a steady revenue stream every month. You should be looking at processors who offer a 10 – 15-day turnaround rate so that you can profit from your material at a rate that meets your financial needs; bi-weekly, monthly, quarterly.
Comprehensive Buying Tools
Your processor should be offering tools that give you fast pricing and evaluation knowledge, like photo grading or VIN & TRIM to converter price. This way, your buyers will have the information they need to make quick and profitable buying choices.
It’s important to note that these tools should follow current market developments. When your buyers have converter prices that reflect current PGM market values, they’ll be offering the most competitive prices, giving them a sharper edge and helping you grow your converter volumes profitably.
The right processing partner will not only help you adapt to the current market reality but also help you thrive in it. No one should have to meet lot requirements that don’t adapt to their business nor to the market they’re operating in. No one should have to wait 90 days to get their assay results and their payment.
The New Reality Is Speed
If your processor isn’t helping you adapt to that reality, it’s time to switch to a different business partner. Partner with a processor who’s got two hands on the wheel and a forward-thinking mindset.
Don’t ignore the profit potential in your catalytic converter recycling business. Thrive by capitalizing on it and gaining a competitive edge that others overlook.
For more information, visit PMR’s Resource Center at pmrcc.com/en/news-blog/.
With a background in advertisement, Joelle Boivin lends her talent to PMR, helping them break down complex industry terms and processes into informational content. PMR believes in equipping recyclers with industry knowledge, giving them the tools to gain more market share, grow their operations, and reach their business goals. And with Joelle on their team, PMR continues to be a customer-centric processor that helps recyclers reach above and beyond.
