3 Reasons Why You Shouldn’t Ignore Your Catalytic Converter Operations

3 Reasons Why

If you’re recycling nonferrous metals in today’s market, it can be hard to give your converter operations the attention they deserve. With low industry volumes and volatile markets, it's easy to see why companies are choosing to turn away from converters. But the truth is, your converter recycling ventures can still be highly profitable.

To prove it, we put together 3 reasons 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, it can 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.

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 take a look at the historical prices for these metals.

Fluctuating Platinum

The average price for platinum in 2017 was $948.86 per troy ounce, which then dropped to $880.53 by 2018. By the end of 2019, platinum had an average price of $863.02, sometimes dropping as low as $785 over the course of the year.

In 2020, the average price for platinum was $882.63 and jumped to an average of $1092.74 in 2021 due to a rebound in demand after the pandemic. In 2022, the market saw prices as high as $1151 and as low as $831. By early November 2023, the average price for platinum was $973.97, and it finished the year with an average price of $960.51.

The data shows that despite all these price swings, platinum remained a profitable metal from 2017 to 2023. We can also see that its profitability is growing, since it ended 2023 at a higher average price than in 2017.

What About Palladium?

In 2017, palladium ended the year at an average price of $1,018.71. In 2018, the yearly average price was $1,028.40 and even climbed to $1,536.74 in 2019.

2020 and 2021 were exceptional for palladium because of unforeseen factors, namely the pandemic. Prices averaged $2,192.54 in 2020 and $2,397.15 in 2021.

In 2022, palladium had an average value of $2,114.18. The average price for palladium in 2023 was $1,392.61, reaching $1,802 at some points and dropping to $1,101 at others.

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 $1012 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 volatility affecting precious metal prices, rhodium rose to an average price of $18,074 in 2021. In 2022, the average price was $14,310. In 2023, sellers could expect an average of $6,054 per troy ounce of rhodium.

These statistics demonstrate that rhodium’s price is 6 times higher now than in 2017. Despite never-before-seen market conditions 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 high as they were six years ago, despite volatile market trends.

Because of this, 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 able to get $91.18 for comparable 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 highly profitable. Despite 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 for Your Business Is Essential

In a business landscape where industry volumes are decreasing and the trend toward consolidation is growing, any opportunity to maximize your revenue is a chance to gain an edge. We know that some companies prefer strategies that worked in the past, but embracing new approaches can get you ahead of the competition.

Exploiting 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 will help you ship converters and get paid quickly. This way, you’ll be able to reinvest your capital into what really matters: growing your business and increasing your market share.

In this industry, getting a competitive edge is critical. That’s why you should be doing everything you can to capitalize on every facet of your business.

But we understand 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 operations 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 low lot requirements that will serve you well in any market. For example, PMR offers lot requirements as low as 100 OEM converters, allowing you to ship as frequently as you want. This way, you can take advantage of market trends before the market changes again.

You should also be able to benefit from transport solutions that streamline your operations. For example, PMR maintains brokerage partnerships throughout North America and collects your converter lots from each of your sites.

This way, there’s no need to consolidate your material at a single location to send for assay. We'll collect your lots and provide assay results for each facility. This helps you get a clear understanding of your material composition and its profitability for each location, as well as real-time insights.

Rapid Turnaround Rates

Quick turnaround times help you capitalize on your material and quickly reinvest your dollars into your business . Your processing partner should offer a turnaround rate that helps you grow your enterprise faster.

PMR, for example, has a turnaround rate of 10 to 15 business days. That means that you profit from your material 6 times faster than the industry standard. You're also growing your business and increasing your market share and your profits 6 times faster than the competition.

PMR believes in constant evolution. That’s why we’ve invested millions of dollars into optimizing our processes and building technology that helps you get ahead. In 2023, we launched research and development initiatives, revamped facilities, and optimized machinery to create an industry first: a 5-day turnaround rate. We expect to hit the ground running with this in 12 to 18 months.

You can look forward to faster processing times and enhanced hedging opportunities, delivering substantial returns on your investment. It’s a unique advantage that no one else in the industry will have.

Comprehensive Buying Tools

Purchasing tools empower your buyers to make profitable decisions that enhance your volumes and revenue. For example, PMR’s Supplier Services Platform offers purchasing tools that help you at every step of the buying process. Lock in profit margins and track your buyers’ purchases with our tracking systems. This way, you can monitor their purchases and anticipate your returns.

The right processing partner will not only help you adapt to the current market reality but also thrive in it. No one should have to meet lot requirements that aren't right for their business or the market they’re operating in. No one should have to wait 90 days to get their assay results and payment.

This new reality requires 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.

Published: November 3, 2023
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