Published in Canadian Auto Recyclers 13#1 2019, Pages 88-89 – February 2019
Montreal November 2018 – One of the more common measures for evaluating catalytic converters these days is the notion of average dollar value per unit. On the surface, this method of evaluation would seem to be a very straight forward way of comparing the purchasing prices of potential cat buyers. Unfortunately, this can be like asking a hungry fox to count your chickens unsupervised.
So how should you count your converters to get the best value? Unless you are already refining your converters just about every other buyer you have encountered so far has a different method for arriving at a “can/unit average,” which in most cases will make his pricing look great! Bluntly stated, converters are only ever evaluated based on the recoverable precious metals contained in the different types of materials. Most toll refiners purchasing material by assay will offer you a more accurate count of your materials and averages will be broken down by the types of converters they are able to process.
For the sake of simplicity let’s say there are 5 types. 1) OEM Ceramic Converters, 2) OEM Metallic Converters, 3) DPF/DOC Diesel Converters, 4) Aftermarkets and 5) Beads. If your current buyer is not identifying each type of material for you, chances are he is a fox counting your chickens. That is to say, in the attempt to offer supposed simplicity, they are ensuring you feel good about your average unit price while doing some creative math in their favor to get there. An honest buyer will give you can counts outlining each type of material and partial cans. The less transparent buyers will combine material or count smaller units as 2 for 1 to achieve a more attractive average.
Now add in the fact that each of the different types of cats listed above are processed differently by a refiner how can there be an average value for all combined materials? While it is always possible to arrive at an average for all the units that leave your facility, the mixture of each material is going to change from one batch to the next. Usually bringing up the question, “What happened with converters this month?” As an auto recycler you really need to be aware of the average value for each material not the combined average as this will alter the view of you month to month converter core profits and how to competitively purchase vehicles to recycle.
How many times has a buyer told you they will be happy to purchase your material with an across the board unit price? If it sounds too good to be true it likely is. What you may not know is that they will be setting the other types of material outside this across the board purchase and will often consider smaller converters half a unit. Pretty easy to count the chickens with a great average value once the shell game starts.
What does a real count look like and how can it help your operation? A real count will give you a detailed report of all the cats leaving your yard for precious metal recovery. This outline should state how many of each of the 5 types of cats you sold including partial units. A refiner will then be able to give you the total weight of ceramic/wash coat that came from the lot and the average weight per unit. Only then can you determine the actual value per unit based on the price of precious metals in the market.
All of this information should closely reflect the types of vehicles you processed this month. If you are consistent in the types of vehicles you process the converter counts and weights should not change much month to month nor should the precious metal recovery. With proper counting you will be able to ensure the security of your material and consistency of return, if there are inconsistencies in any piece of the puzzle a good refiner can help you understand, “What happened to Cats this Month?” If your buyer has no answers for you, maybe it’s time to look to professionals that will be more of a partner than a predator.
Transparent converter counts and averages by material type with PMR – Contact us for more information.
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