$900 Palladium soon?
asheland
Posts: 23,183 ✭✭✭✭✭
It almost looks like Palladium may pass by Platinum. I wonder why this is?
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asheland
Posts: 23,183 ✭✭✭✭✭
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I've heard in thus forum that palladium is mostly used in catalytic converters, but that car sales are terrible. So why has it been moving higher? Ate the first 2 premises inaccurate?
Knowledge is the enemy of fear
Car sales are not terrible, thanks to "creative" and very loose financing. What you heard in this forum is that new car debt will eventually prove to be terrible to the economy (and future car sales themselves) just as happened with creative and loose real estate financing . One only need look at what caused the real estate bubble as well as its result to predict the future of car sales (both new and used) and palladium. Like all other areas of the economy, the "too much debt chickens" will come home to roost. Fed fueled Boom/Bust cycles at work once again.
There is currently strong demand for palladium (converters) but I would not look for it to be long term.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I have not researched this.... and probably should.......Is the palladium cannibalized in the converters? Or is it recoverable? Cheers, RickO
@ricko I believe they can recover it.
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Thanks, might be worth scavenging later model wrecks then..... Cheers, RickO
its easy to recover for the re-refiners . They don't seem to want to pay for it though. I've been sitting on a small nest of converters for over a year , if they don't hatch soon I'm going to make an omelet
Must be a complex recovery system then..... Cheers, RickO
Its not really , theres a thin metal case that has to come off. They are sold with the case intact so that the chain of 37 middlemen along the way know what they came off for sorting and bundling . Different makes and model years are more sought after. Some are essentially worthless like for instance after market replacement cats.
Back when my 89 F250 had to pass emissions I needed to redo the exhaust in the late 90's and found a true factory replacement cat setup would be over $1500 . However , aftermarket replacements that cost less than $100 were available which would give a clean number on the test.
To me that indicates that the passage of time allowed improvements in the cats or smaller amounts of PM's being used . Obviously the OE manufacturers were porking people buying them at the parts counter as well.
I don't get many foreign cats but those tend to be worth more especially from the 80's and early 90's. Also improvements in computer engine management and smaller engines might mean newer models might be worth less.
Some of the older engines like the Ford 460 cubic inch V8 were filthy , large bore cylinders are hard to make clean burning because the flame fronts go out before all the fuel gets burned . There was also a GM truck cat , from 454 engines I assume , that was highly sought after when prices for scrap cats was at its peak.
As cars got newer they were using less cats or smaller sized cats and probably refining the way they function.
It's probably true that as hybrids and electrics gain market share this will continue.
Palladium Blows the Whistle on the London Metals Market
"During this past week of June 5 to June 9, 2017, we've seen a notable palladium lease rate shock in London. The lease rate is the per annum cost to borrow metal for various maturity periods (1-month, 3-month, etc.) and it increased last week from 3.5% to approximately 16% in London. Also of interest is that the normally reliable Commerzbank stopped publishing its London precious metals lease data on June 5, 2017. While additional palladium may temporarily be borrowed to reduce the London lease rate, market shortage for this metal is clearly now at play."
Palladium Lease Rates from 2006 to 2017:
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The ETF PALL is one way to invest in the palladium paper market. Easy in, easy out with a brokerage account. Trades just like a stock.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
My understanding is that platinum is a tougher metal with more resistance to fouling, corrosion, heat fatigue, electrical discharge etc. than palladium although both are used in similar ways as catalysts. So, I would expect platinum to be "worth" more intrinsically, but the supply picture with Russia and South Africa as the main producers of platinum might influence the price compared to palladium. I know there's one US supplier, but I don't recall the worldwide dynamics of the palladium market. I would guess that Canada has at least one major palladium supplier as well.
I knew it would happen.
London's Palladium Market's Metal Shortage
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Ricko, I was one of the GM engineers that helped to establish the "above ground mine" for reclaiming precious metals from catalytic converters on GM cars. For a long time, there was no established and efficient way to recover the metals from the junkyards. Often the junk dealers would visit dealerships and scrap yards to pickup converters and give the techs a little beer money as a reward (of course much less than actual value). People knew there was value there, but didn't have a good way to unlock it.
Fast forward to the late '80's and we decided to institute a "core" process similar to those used for batteries, starters, and the like. Dealers pay a core charge on a replacement part - on top of the part price. This encourages people to return the used parts to get the core charge back instead of feeding the junk dealers. The core charge has to be high enough to make the system work - but not too high. Of course, this process does not handle the parts off of junked cars.
The trick is the logistics of picking up all the parts. Since GM is large and supplies parts to dealers all the time, it was simple to establish the pickup of converters along with batteries and other core charge parts. They are then consolidated for shipment to the recycler.
Remember that in the old days converter contained 1/8" ceramic beads coated with catalyst. Those babies were tough so the usual method to remove the catalyst was to remove the fill plug (about 1.5" in diameter) and shake out the contents - a real pain. Fortunately these were only used from 1975 to about 1981 (but there are exceptions).
Since about 1981, vehicles were fitted with three way catalysts where the ceramic beads were replaced with a ceramic honeycomb substrate. This improved catalyst performance and reduced backpressure in the exhaust. Catalyst materials were applied to these substrates in with varying amounts of Pt, Pd, and Rh depending on what was needed to meet the emissions standard.
Removing the honeycomb catalyst was a little easier as a steel rod pressed into the intake or exhaust end of the converter would effectively break it into pieces that would come out pretty easily. This was collected in drums for processing, but still a dirty job.
The cracked up honeycomb was then sent thru a hammermill to pound it into very small pieces. Coarser than beach sand, but not by much. This greatly reduced the volume so shipping costs were minimized. One key to this process is to accurately sample each lot and then run an assay of the metal content to determine value. It takes some time to develop natural "loss factors" thru the process as it is unrealistic to recover every atom (as the accountants would like).
So now what? You have gaylords full of granular material that is rich in precious metals. How do you get the metals out efficiently? We tried several methods. The one we settled on was to actually send the material to a nickel mine where ore was being processed. The rich material was dumped on the same conveyor as nickel ore and their refining process recovered not only the nickel, but all the other precious metal byproducts. We settled based on the third party assays, and either took delivery in metal or in took cash.
As mentioned above, this did not encompass junk cars or other manufacturers vehicles. I know the process was expanded to include larger junk dealers on the east coast and possibly nationwide. I left this project to work on catalyst coating installations in other countries so I lost track.
Anyway, the process has likely been improved in the last 25 years, but I am certain that significant amounts of metal are being recovered.
Ricko, if you have any questions, just PM me. I will be happy to share.
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Even if it hits $900 it won't really be $900 . It will be $970 to buy an ounce and $830 to sell it .
Fascinating information Cameonut. Thanks so much.
Here's a warning parable for coin collectors...
@Cameonut .... Thank you for your excellent explanation of the recovery process. Cheers, RickO
It looks like it finally broke the $900 mark.
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