Over the years there have been many myths, misconceptions and legends in the converter business, which has translated into a problem for scrapyard owners and managers around the world. Who can be trusted with highly valuable cores? Buyers of all sorts have been knocking down doors for years offering "the best price" or "most money" for converters. With so many buyers out there, how can scrapyards possibly separate the wheat from the chaff? This article will give an insider's perspective on the top 10 common misconceptions in the catalytic converter recycling business, and how to actually get the most dollars for your cats.
In no particular order, as it would be very difficult to quantify the following myths and misconceptions, I will try to shine some light on the catalytic converter recycling process from the inside out. To qualify how I came up with this top 10 list, I have over the years spoken with hundreds of scrapyard owners and managers who have (with interesting and sometimes very colourful language) made some version of the following ten statements.
1.) "Getting multiple buyers to bid on my stock will get the best price."
In theory this works well, as there are many different types of buyers out there and they will most definitely have conflicting information regarding converters. The conflict is present because each buyer will be selling the converters to different companies who in turn educate the buyers on the value of the material differently. Prices will vary further depending on how many times the converters change hands on their way to being processed and refined.
There are other factors to consider here as well. Has the buyer that won the bid inflated his pricing so he will not have to bid the next time? Is the mix of converters similar each month? (Bear in mind that it is next to impossible to make two identical loads of converters, because no converter lives the same life.) Are the core buyers in your area colluding to swap the winning bid back and forth every other load? How many serial numbers can each buyer actually see on your converters? What percentage of the load is being purchased by grade rather than number?
There's a lot to consider here, and the answers to these questions must keep many scrapyard owners and managers up at night. Truth be told, unless you are already dealing with a converter processor/refinery, the core buyer at your doorstep is going to sell the material up the chain and each hand will take a portion of the profit. There is nothing unusual about this, as core buyers are trying to make a living and survive while also (for the most part) trying to give you the best price for your converters.
In the end, the bidding war idea looks like it should be more profitable, but ultimately if converters are going to change hands, there is still money being left on the table that yard owners are missing out on.
It should be noted however, that there have been situations where yard owners and managers have received more money from core buyers for some of their converters than what they are actually worth after being refined and processed. Buyers will either overpay due to inaccurate pricing information or as a strategy to win a bid. Needless to say, these core buyers/companies have either gone out of business or will eventually no longer be able to sustain themselves before going under. Buyers will not be able to continuously overpay for material and sustain their operations - the two cannot coincide.
2.) "Selling by number gets more dollars."
Many converter companies today are investing a lot of time and money into developing databases that contain the values of converters by serial number. Some are more advanced than others and are able to offer these tools online, while others are still sending out a price list every week. These lists can contain hundreds of different numbers with values.
There are three very clear reasons why this is not the most profitable way to sell material.
First, when a converter company pays for a converter by number they have taken one example of that converter (or sometimes several of the same number/converter) and analyzed that specific converter for its value. In order to be profitable they need to build in their profit margin to the value of the published number. Often these companies will allow a few rare numbers to be published at the top end, with next to no profit, to look like they are giving the seller more. In reality these numbers will represent less than one percent of any given load. The company will surely make up the difference in bigger margin converters.
Second, converters by nature are dirty, rusty things that are being harvested at the end of a vehicle's life. Even the most experienced buyer with the best information in the world will only be able to find, at best, 60 percent of the codes, even on converters that are in the most pristine condition. Once you factor in cars that are driven in regions where weather further impacts the condition and erosion of the converter, that 60 percent average could drop drastically to less than 25 percent. As a result, core buyers cannot stay in business if they are purchasing a high percentage of material at a low margin of return. They also cannot be aggressive in pricing with converters they are not familiar with. Essentially, core buyers need to ensure there are gains to be made on their end, which is done by taking a cut of the scrapyard owners converter profits.
Third, and perhaps most important of all, the buyer in your yard is still going to have to resell the material to a processor/refinery to make a profit. The change of hands ultimately means the scrapyard owner is at least one, if not two, steps away from getting the most value out of converters.