You’re in the scrap catalytic converter business because you want to make money. But, more often than not it seems as though you’re getting LESS cash for your cats than you had expected.
If this sounds familiar, you are not alone.
Fortunately there is a solution, and we’ll show you what YOU can do about the price of your scrap cats, whether you are a vehicle breaker, collector, broker or trader.
the starting point
Albert Einstein, the world’s most famous brain donor (sort of), said it best:
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
While Einstein was referring to interest earned on money, the same process operates very well in our business. Unfortunately it’s usually to the negative, and as a consequence we see a lot of people in the autocatalyst trade who “pay it”, unnecessarily leaving a LOT of money on the table in the process.
Allow me to explain:
We’ve nailed down 5 key drivers for the value of scrap cats. I’ll get into more detail about what these drivers are a bit later, but in the meantime let’s just call them Price Driver A, Price Driver B…etc.
Crucially, most people in the business believe they have NO control over these price drivers. As a consequence, most are price takers and entirely at the mercy of the price drivers, which invariably act to the downside.
Being out of control of the prices you get for your cats is not ideal, not necessary, and is losing you a lot of cash.
Let’s look at this a bit closer.
In isolation, each of these price drivers has only a limited impact on the cash you get for your scrap autocatalysts. When these price drivers compound, they have a dramatic downward effect on the cash received for your cats.
BUT, once you take control of the price drivers, you can turn this compounding effect to your advantage.
To demonstrate, let’s consider a simple hypothetical example:
You’ve got a pile of scrap catalytic converters, say one hundred pounds of decanned matrix, and you manage to figure out that overall your pile contains 0.2% Pt, 0.1% Pd and 0.05% Rh.
That works out at about 6.2oz of platinum, 3.2oz of palladium and 1.6oz of rhodium. After you check the price charts and add it all up, you find that it’s worth $10,000*.
Ok great. But, you also know that $10,000 is the in-situ value of the contained precious metal, which you are NOT going to get. Because you are not in control of the price drivers, you resign yourself to taking a cash hit. But just how much of a hit will it be?
Let’s look at it in terms of our 5 price drivers, which for the sake of this example we assume each have a 10% negative effect on the cash you get for your lovely pile:
So a $10,000 in-situ metal value after being affected by the 5 compounding price drivers can become $ 5,904 like this:
Price Driver A: -10% = $9,000
Price Driver B: -10% = $8,100
Price Driver C: -10% = $7,290
Price Driver D: -10% = $6,561
Price Driver E: -10% = $5,905
That’s a more than 40% reduction of your $10,000. Not great.
Now, suppose that you could get a bit of control over these five price drivers, where instead of -10%, we manage -5%. Your $10,000 instead looks like this:
Price Driver A: -5% = $9,500
Price Driver B: -5% = $9,025
Price Driver C: -5% = $8,574
Price Driver D: -5% = $8,145
Price Driver E: -5% = $7,738
The difference between Scenarios 1 & 2 is $1,833. That’s a 31% increase on your cash return, just for taking a bit of control of the 5 price drivers!
Now think about what’s possible when you take more and more control of these drivers…