May/June 1988
The competition for recycling platinum-based scrap is already keen, and the Japanese market share is growing.
By Robert J. Garino
Robert J. Garino is director of commodities for the Institute of Scrap Recycling Industries, Washington, D.C.
Despite slumping values for platinum, palladium, and rhodium--commonly referred to as the Platinum Group Metals or PGMs--in early 1988, auto catalyst recyclers are calling near-term demand prospects "bullish." At the same time, domestic converters acknowledge growing offshore competition for platinum-based scrap.
At a Capital Metals and Materials Forum, co-sponsored by the Bureau of Mines and the Treasury Department and held in Washington, D.C., on February 24, James Saville, Texasgulf Minerals & Metals Inc., Anniston, Alabama, said that between 150,000 to 200,000 troy ounces of platinum should be recovered from spent automobile exhaust catalysts (autocats) in 1988. A similar view was voiced by Ashok Kumar, A-1 Specialized Services and Supplies, Inc., South River, New Jersey; Kumar also estimates that 40,000 ounces of palladium and 5,000 ounces of rhodium would be reclaimed this year. Total PGM recovery in 1988 could, in fact, set new records.
Saville did not expect the declines in platinum and palladium prices over the first four months of 1988 to have a lasting effect on 1988 recovery rates--as long as metal prices remain high enough to encourage auto-dismantling yards to remove converters from scrapped vehicles. With platinum at $450 to $475 an ounce in February and March, autocats were quoted at $8 to $10 each, delivered to scrap plants. Saville estimates that the trigger point for converters at most yards ranged between $3 and $5 per converter. Below that, the incentive to remove the catalyst seems to disappear. Kumar believes that a $3 price is too low for most dismantlers, but that $5 per converter would be a "sufficient motivator."
Asian Exports Take Larger Share
While the PGM contained in autocats constitutes a major share of the total North American secondary PGM recovery, most platinum-based precious metals will be extracted and refined outside the U.S. Currently, most PGMs are refined in Europe, but Japan accounts for a growing share, according to Saville. He foresees the Japanese achieving a two-thirds to three-quarters market share in 1988. This outlook indicates a sharp change in market focus since ReMA's Precious Metals Roundtable in December 1987, when the Texasgulf Alabama operation was said to hold a 75 to 80 percent share of the total domestic market.
Clearly, Japan is interested in the U.S. market. Most Japanese penetration has occurred in the Midwest and Far West, where they have established several collection centers in cooperation with local operators. Saville noted the so-called "targeting" of this industry by a consortium of Japanese firms. This targeting, he said, is similar to the approach that Japanese electronics companies used in competing with the U.S. electronics industry. Saville stated that this consortium, called the "Spent Catalyst Recovery Association," consists of 35 companies that hope to secure an important position in the North American PGM market. Because Japan has become the biggest market in the world for platinum (imports there totaled more than 1 million ounces last year), it is presumed that this consortium wants to develop a safe alternative source of platinum-based metals in case PGM supply from South Africa and the Soviet Union is interrupted.
To illustrate how serious the Japanese are, Saville suggested that they might be paying more for U.S. converters than the intrinsic worth of the contained PGM. While Kumar did not support this claim, he readily admitted that the Japanese are "worthy competitors."
The Impact of Exports
Exports have had quite an effect on domestic converter/catalyst pricing. According to Saville, when platinum was trading at $437 an ounce in 1981, Texasgulf was paying $1.11 per pound of bead catalyst and $2.41 per pound of honeycomb catalyst. However, due to competition from the Japanese, Texasgulf was paying $2.20 and $5.50 per pound, respectively, in a $450-an-ounce platinum market. Kumar took some exception to the example used by Saville; he reasoned that current higher prices do not represent much change because the catalysts manufactured today are richer in platinum and rhodium than they were in 1981.
Competition is very keen at the collecting, concentrating, and refining stages. Relatively soft PGM values in early 1988, coupled with offshore demand pressures, are presenting new challenges for domestic recyclers of autocats.