PGMs & Converter Recycling 2024 – Where Do We Go from Here?
by Becky Berube
Auto catalyst recycling has seen a substantial decline, with volumes down by approximately 30% or more from their peak in 2019. The trends in the auto catalyst recycling market and platinum group metal (PGM) prices are driven by a complex interplay of economic conditions, supply chain dynamics, industry-specific changes, speculative activities, and geopolitical risks. These factors are interconnected, with changes in one area often having cascading effects on others. Understanding these relationships is crucial for predicting future trends in PGM markets and the recycling industry.
What Happened?
Recycling Volumes Down. Daniel Croft, Commodity Analyst, for UK-based metals consultancy, SFA (Oxford), stated that, “Platinum-group metals’ (PGMs) open-loop recycling is estimated to have grown from ~500 koz. in the mid-1990s and less than 1 moz. in 2000 to 4.21 moz. forecast for 2024 in 3E PGM terms. From 2000 to 2019, PGM recycling grew by an average of 9% p.a., peaking at just below 5 moz. just as the Coronavirus began to spread around the globe.”
Auto catalyst recycling volumes have declined by around 30% from their peak levels, mainly due to consumers holding onto vehicles longer amid economic uncertainty, which has reduced the availability of end-of-life vehicles (ELVs) for recycling. Additionally, the global semiconductor shortage disrupted automotive production, further limiting the flow of older vehicles to scrapyards. Lower PGM prices have also made recycling less economically viable, leading to decreased activity and hoarding of spent catalytic converters by recyclers.
PGM Prices Down. Platinum peaked in 2008, at $2,200/toz., now down 58% to $900/toz.; Palladium peaked in 2020, at $3,000/toz., now down 68% to $950/toz; and Rhodium peaked in 2021, at $29,000/toz., now down 85% to $4,520/toz.
The factors affecting PGM prices are multifaceted. Global economic conditions, including inflation and rising interest rates, impact investor demand and the opportunity cost of holding PGMs. Supply chain disruptions, particularly in regions like South Africa and Russia, where PGM production is concentrated, can lead to supply constraints and price spikes. The automotive industry's shift towards electric vehicles (EVs) and hybrids affects long-term PGM demand, though hybrid production still supports demand in the short term. Speculative trading in the futures market, especially in palladium, adds volatility, with large short positions creating the potential for short-covering rallies. Investment demand for PGMs as a hedge against economic uncertainty can also drive prices higher, while geopolitical risks, such as sanctions or political instability, further contribute to price fluctuations. Technological advancements in emissions control systems and government policies enforcing stricter emissions regulations also play crucial roles in shaping PGM demand and prices.
Market Trends and Future Outlook
Impact of COVID-19. The pandemic caused a significant drop in vehicle production, which has yet to fully recover. This has affected both the supply of end-of-life vehicles for recycling and the demand for new vehicles with catalytic converters.
PGM Market Outlook. The platinum market has shifted into a structural deficit due to flat primary supply, recovering demand, and lower recycling rates. Palladium and rhodium markets face similar supply challenges, with potential shortfalls expected in 2024.
Of note, in speaking with SFA (Oxford) they commented that, “As an observation, one area that everyone is getting blind-sided by is why do all forecasters have deficits and palladium prices aren’t rising. It is worth noting that supply is falling (lower recycling) and demand is falling, it’s just that supply has fallen faster than demand – although this isn’t a reason to bang the table and say prices should be higher even with a fundamental deficit. In an ideal situation for recyclers demand is rising and mine supply can’t keep up or we have a major disruption to supply, and prices go through the roof.”
For a more in-depth look at historical PGM prices, market balance, and world events see Figure 1.
Long-Term Recycling Growth. Despite recent declines, recycling volumes are expected to grow in the long term as vehicles age and more are scrapped, with government policies potentially accelerating this process. SFA’s Croft goes on to say, “PGMs need cars, cars need PGMs.”
For a copy of SFA Oxford’s Platinum Standard, May 2024, or other publications, email them at info@sfa-oxford.com.
For daily updates on the PGM markets, subscribe to the United Catalyst Corporation daily e-newsletter, the 60-Second Report, TEXT Daily to 844-713-PGMs (7467). To learn more about recycling converters on assay or the United Ecosystem Bid Tool, you can also call an Account Executive at 864-824-2003 or email a specialist at sales@unitedcatalystcorporation.com.
Becky Berube has served the recycling community for over thirty years. Based in Greenville, South Carolina as President of United Catalyst Corporation, she writes a monthly educational column for the industry, and serves on several ARA and ReMa committees. She is a newly appointed Advisor on the US Industry Trade Advisory Committee on Critical Minerals.
She was a recipient of a 2023 South Carolina Women in Business Award and is a mentor in the Women in PGMs program. Additionally, Becky serves as an At-Large Director of the ReMa Southeast Board, Co-Chair of the IPMI Preventing Auto Catalyst Theft Committee, and is on the Board of Directors of the International Precious Metals Institute (IPMI), where she is a past President.
Becky (Temple) Berube | LinkedIn
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