Toll Refining vs. Per Unit Pricing for Scrap Catalytic Converter Value
The catalytic converter processing industry is constantly changing according to recycling needs and environmental standards. There used to be a simpler time when buyers would acquire converters with just three grading categories: small, medium, and large.
Now, we have well over 65 grading categories, with more than 20,000 serial number combinations. With such a rapidly evolving industry, recyclers face important challenges when selling scrap catalytic converters. The most important question of all is: “Do I sell per unit or through toll refining?”
What Is Toll Refining?
In the catalytic converter processing industry, toll refining is the process in which the owner of scrap converters contracts the refining of their converters to another party for a fee. The refined metals extracted from the cores remain under the original ownership for final sale or disposition.
Processors will decan and crush converters to extract platinum, palladium, and rhodium and funnel these precious metals back into the global economy.
How Does a Toll Refiner Value the Material it Receives?
Catalyst material is bought from recyclers based on the recovered metal ounces in their material. To determine catalytic converter value, processors sample and assay the ceramic material that scrap converters contain.
The sampling and assay process must follow strict guidelines to ensure that the real value of the material is returned to the recycler. For sampling, a crushed and commingled powder of all a supplier’s converter load must be homogenized before being sent to assaying. When the sample has reached assay, it’s examined through XRF benchtop or ICP machines to produce conclusive results.
Internal sample and assay procedures have protocols to ensure reliable returns, and these protocols must be followed strictly.
Selling Per Unit
Selling by the unit means using a price list and/or a serial number catalog to determine catalytic converter value without assaying the material. This can mean sometimes using exaggerated or inaccurate pricing information. This can result in unjustified spikes or decreases in the price.
Converter Lifecycle
It’s important to note that converters go through very specific and different lifestyles. There are way too many variables in converters, even those with the same serial number, to put an exact price on a specific unit without sampling and assaying. Some of the variables include, but are not limited to, the country/state the car was originally sold in and environmental standards, mileage, the converter material type, and vehicle use.
These variables can affect catalytic converter value, dragging it down or up by 15% or more.
From the Scrapyard Perspective
Selling per unit can get confusing, especially when you’ve been trained by trusted buyers that a General Motors Large Bread Loaf is worth $X and a Honda O2 Premium is worth $Y. It’s even more confusing when another trusted buyer comes along and offers even more for the same unit in the same week. How can that be?
Two kinds of buyers
It’s possible that one buyer has a reliable database of information, and he’s an honest broker making an honest living, reselling the material up the food chain.
However, it’s also possible that the other buyer has exaggerated the value of the converters on his price list or serial number sheet to make the scrapyard owner think that he is paying a higher price for everything else. It’s common to have buyers present a serial number catalog or price list with the right pricing information for well-known converters, but for the rarer converters, the pricing information is completely wrong.
It’s important to understand, though, that both buyers graded and/or evaluated the load differently to show it in the best light, hoping the number looks better or is higher than other buyers. They are hoping to somehow still make money.
Why? Road buyers need to take into consideration their time, their transport, their employees, the facility where they stockpile material, and the cost of shipping to a toll refiner. No wonder prices can be exaggerated.
Toll Refining is The Answer
There’s a reason why toll refining is the golden standard in catalytic converter recycling. The toll refining process crushes and commingles your entire load, samples a homogenized powder from it, and analyzes it using cutting-edge technology. This way, you’ll know your material’s true value, without taking a bet on it, or having to trust someone with just a sheet of paper.
Payments that are returned from toll refining are substantially higher than those from a converter company that is purchasing material by serial number and/or grading only. The margin of error for toll refining is less than 5%.
On the other hand, the company that is purchasing by the unit without toll refining must insulate themselves from market fluctuations, reliability of information, and the knowledge from each of their buyers. This results in a price difference that can be between 10% to 25% less than toll refining.
Choosing the Right Toll Refiner
There are some questions to consider before entering a partnership with a converter processor. How fast are their payments? What are their minimum lot requirements? What are the percentages of reclaimed metals being paid back? Are there any other fees involved?
From an insider’s perspective, there is really only one way to get the most out of your catalytic converters, and that’s toll refining.
Choosing the right catalytic converter processor means carefully evaluating your needs and understanding how a toll refiner fits into your business model. Learn more about choosing a catalytic converter processor.
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