UCC Article Archive – 2019 – Becky Berube

The more we travel with recyclers, the more we hear about converter averages varying. As recyclers, you worry that you may not be getting all the value for your converters, so you try a variety of selling methods to get the best price. You sell them out the door for a spot price. You inventory each unit and grade them or send them out for bid using an app. You bring in three companies and have them bid on your lot. You send them to a processor who assays the lot and sells the metal for you. 

The Count is Still King 

No matter which way you sell your converters, make sure you and your team count the lot before you sell. Full converters. Half converters. Metallic/foil converters. Aftermarket converters. DPF converters. Empty converters ($0). Each of these units has a different average. The average can easily be manipulated by lowering the unit count to look like your average is higher. Whether you sell on your premises or ship your converters, make sure you receive the count sheet and compare it to your number. If you need a worksheet, we will gladly send you one. 

I Get Different Prices on Different Apps for the Same Code 

Maybe you sell to a few companies to compare data. Company A and Company B both have apps to inventory or look up converter values, but they are never the same. Why is that? A couple of reasons. Company A and B both have margin built into their apps and it is likely not the same. This is no different than a new-fangled price sheet. It may be built on assay or test results, but it still is not transparent. The second reason is that converters are not uniformly coated with precious metals. No matter how often you perform a test on a unit or code there will be some statistical difference due to it having a variance in its loading from the beginning.  

I Sell on Assay and My Average is Lower than what the Street is Paying  

For those of you who are selling on the scientific and verifiable method of assay, sometimes you hear that another recycler is getting a higher average than you are. There are a couple of legitimate and illegitimate reasons this can be.  

Legitimately, no one ever has the same cars or converters being processed. This is true of your own yard profile as well as comparing your yard or lot to another recycler. Expect averages to vary somewhat from lot to lot. Also, if you have late model converters, expect a smaller average weight per unit and significantly less Platinum and more Palladium and Rhodium. 

Illegitimately, the count and or the grading could have been manipulated as stated above resulting in a higher average. You may have even donated some converters for free if there was a slight of hand and you didn’t count or get count sheets.  

The worst reason you might get paid more than the true value of the converter is someone simply overpaying the market to cherry pick and dump low grade converters on the company they sell to. This happens frequently and leads to the demise of many companies involved in such schemes. All in all, it hurts the industry. Moreover, if the result is a bankruptcy it can lead to you owing money back that you have been paid in the past 90 days before the company filed.  

Sell Converters on Assay and Establish a Know Your Customer (KYC) Program  

It used to be that to work with a converter processor on refining terms, you needed to have huge volumes. Today, thanks to the work companies like United Catalyst Corporation and others are doing, processing and refining is becoming more accessible to individual automotive and scrap metal recycling companies regardless of their size and converter volume.  We believe every recycler should be entitled to get the most from their converters.  

Every article I write is committed to educating you so that you can never be taken advantage of when it comes to selling scrap catalytic converters. That includes being a victim legally as well as financially. 

In recent years, authorities in the US and abroad have increased their focus on modernizing and enforcing anti-money laundering and terrorism financing (AML) regulations. As part of these efforts, the US’s Financial Crimes Enforcement Network (FinCEN) proposed Know Your Customer (KYC) requirements in 2014, which became law in 2016. 

KYC procedures are critical to helping you analyze and monitor risky customers. And, KYC is a legal requirement to comply with anti-money laundering (AML) laws. For more information on setting up a KYC program, send us an email.  

The 4 P’s of Converter Recycling Profitability  

In an industry that has historically been rife with smoke and mirrors, as recyclers looking to get the most from your converters, you need a Process, a Program, and a Partner you can trust, and you need to learn the Power of Education.   

A Process. You can sell on assay instead of selling by the piece. You will need to be paid on a sample and assay that are official, accurate, and verifiable. 

A Program. You need to be able to get money when you need it to run your business. Getting you the most money from your converters shouldn’t mean you have to wait until you have a truckload or can hold out for 3 months to get paid. If you can afford to do this, you may pick up a point or two more.   

A Partner. Selling scrap catalytic converters has always been a risky business. Taking a price on something where the value is unknown screams “seller beware.” Selling on assay or recovery helps to eliminate that problem because there is a test result that can be considered the basis for the sale. However, even with this method, several things can still go wrong: settling on an inaccurate or manipulated sample and/or assay result; losing weight during processing and refining; having too much trash and/or moisture; paying exorbitant recycling costs; and selling metal that is too heavily discounted. For all these reasons, the importance of working with a Partner you can trust cannot be overstated.   

The Power of Education. At United Catalyst Corporation we believe that an educated recycler is our best customer. In fact, we give you an education in auto catalyst processing and precious metals refining. We take a complex process and try to make it understandable and easy to use. We know that once you learn about your converters and your yard profile, you will increase your profits, and no one will ever be able to take advantage of you again.