WE MARKET SIZED THE CATALYST RECYCLING INDUSTRY IN 2017📈

POSTED BY ALICE

 

 

We have spent the last few weeks researching the scale and extent of the catalytic converter recycling market, "market sizing" the industry for 2017. And what is immediately apparent is that this "new" industry, which only appeared two decades ago, is still generating money.

First, we looked at the car industry, the key sector for Platinum Group Metal demand. From there, we attempt to understand where all the PGM's are becoming from and how the supply meets demand.

 

Automotive Industry

Car Production Volume

We estimate that the global production of cars is approximately 100m. per year. China is the largest manufacturer with 29 million units produced annually followed by:

 

  • China: 29m. units
  • Europe: 23m. units
  • Other regions: 20m. units
  • North America: 18m. units
  • Japan: 10m. units

     

2017 Vehicle Production by country

Source: OICA

NB: China's vehicle production is driven by the traditional "Big Four" domestic car manufacturers - SAIC Motor, Dongfeng, FAW, and Chang’an.

 

Types of engines

When it comes to autocatalysts, it is important to know what the main type of engine that is produced annually in the industry.

Gasoline engines are the most common for cars, with around 75 million units produced - accounting for around 75% of the 100m. cars produced annually. Next comes Diesel engines with 19 million units per year. Finally, Electric engines, that are becoming increasingly important in the car industry, with 6 million units produced.

With the Diesel Gate scandal, both producers and consumers tend to no longer trust Diesel engines and are turning more and more to buying Gasoline engines -  or Electric for those who can afford it. As Gasoline engines use more Palladium, the price of this precious metal is rising. On the other hand, the decline in demand for Diesel has impacted negatively on the Platinum price.

 

Evolution of Auto Recycling

At around 25-30%, recycling rates in Europe (and globally) are still disappointingly low. A large number of deregistered cars have gone “missing” in recent years, as a result of which The European Commission has introduced an End of Life Vehicle Directive in order to get these vehicles legally scrapped. The target is for at least 85% to be stripped of their materials and hazardous waste and recycled. The big issue, though, is that the EC does not know where they are and many fall through the cracks.

Illegal scrapping explains some of the discrepancies, exporting to emerging markets more, although the exports do not necessarily carry the autocatalysts on them. Often, due to the lack of emissions legislation or enforcement in some countries, autocatalysts get cut from vehicles and remain behind to be recycled.

With auto catalysts representing 30-50% of the vehicles’ scrap net worth, this practice can skew the reporting figures, with the recycling of PGMs occurring in a different year to the scrapping of vehicles.

Countries within Europe have various scrapping schemes in place. Some offer a small premium for old cars since they will be able to sell parts or recycle some of the material, such as PGMs; others charge a premium.

Deregistered vehicles in Europe account for about 14-15m. units per year, although statistics on scrapped vehicles are heavily under-reported, often by 50%.

European autocatalyst recycling rose 9% for Platinum, due to higher scrapping levels for diesel engines, and 17% for Palladium to 0.4m. oz. (12 tons) and 0.5m. oz. (15 tons) respectively in 2017. This rise came after a few years of tightness with low commodity prices motivating recyclers to hold on to their metal.

 

Where are these PGM coming from?

As of today, precious group metals are coming from different industries. Today we are going to look at how much Platinum and Palladium are produced all over the world and where it is coming from. As this blog is concentrated on catalytic converters, we will take a particular look at the autocatalyst industry.

 

🟢 Mine Production: 12.6m. oz. (393.9 tons)

Obviously, the first supplier of PGMs is the mining industry. Since 2009, mine production increased by 2.38% reaching 12,663m. oz. (393.9 tons) in 2017.

 

🟢 Scrap Jewelry: 0.7m. oz. (22 tons)

Old jewlry

 

Old jewelry scrap is the last form of PGM recovery but must be taken into account. Even though the industry is declining, by 6.7% since 2009, it still represented 0.708m. oz. (22 tons) in 2017.

 

🟢 Used Auto Catalysts: 3.4m. oz. (104 tons)

Since 2000, auto catalyst recycling has been continually rising. Both Platinum and Palladium have reached new recycling records - 1.2m. oz. (37 tons) and 2.2m. oz. (67 tons) respectively - driven by various scrapping schemes in the aftermath of  “Diesel Gate”

In North America, platinum recycling increased by +1% and palladium by +8% to 0.5m. oz. (14 tons) and 1.2m. oz. (37 tons) respectively. The USA is more highly geared to gasoline cars which have more palladium and rhodium in their catalytic converters.

In Europe, Platinum recycling increased by +9% reaching 0.424m. oz. (13.2 tons) whilst Palladium increased by +16.63% reaching 0.477m. oz. (14.8 tons) in 2017. This makes Europe the second largest autocatalytic recycler.

Japan on the other hand declined in PGM recycling from autocatalysts with -3% for Platinum and -2% for Palladium. The land of the rising sun registered respectively 0.07m. oz. (2 tons) and 0.1m. oz. (3 tons)

China tends to get older cars off the road and thus, the volume of catalysts is rising every year. Platinum recycling rose to 0.07m. oz. (2 tons) and Palladium surged by 22% to 0.2m. oz. (6 tons).

Finally, the Rest of the world increased its recycled volumes of scrap catalytic converters as well, by 6%, reaching 0.2m. oz. (6 tons) for both Platinum and Palladium.

 

That makes a worldwide combined recovery of Platinum and Palladium of 3.4m. oz. (104 tons) annually and North America is clearly the leading country in auto catalyst recycling with 49% of the worldwide PGM recovery in 2017.

 

 

PGM PRODUCED BY COUNTRY

Source: Thomson Reuters

North America is clearly the leading country in auto catalyst recycling with 49% of the worldwide PGM recovery in 2017.

 

 

What is the demand for PGMs?

After analyzing all the different suppliers of PGM's, we can estimate the approximate annual supply at 16,717m. oz. (519.9 tons). Since 2009, the production rate is approximately +11.5% with more and more PGM's produced around the globe.

The global demand on the other hand was 17.97m. oz. (559 tons) in 2017, representing an evolution rate for PGM's of +27.37% since 2009.

 

 

Production demand for Pt & Pd since 2009

The demand is now becoming higher than the actual production

Since 2011, the global demand for PGM's is becoming increasingly greater than the actual supply that the industry can offer. Thus, PGM's prices are globally rising, making them increasingly rare metals.

 

 

Rhodium Focus

Rhodium is a specific Precious Metal with very little information available, but according to our research, annual production reached over 1,000,000 oz. with more than 80% coming from South Africa mines.

However, we can estimate that the Rhodium supply from used auto catalyst recycling was around 272,000 oz. (7.7 tons) for 2017.

 

How big is the catalytic converter market?

In 2017, 1.2m. oz. (37t) of Platinum and 2.2m. oz. (67t) of Palladium were recycled from spent autocatalysts.

In 2017, the average annual Platinum price reached $949/oz and the annual average price of Palladium reached $868/oz.

This means that, in 2017, Platinum and Palladium from autocatalyst recycling generated approximately:

1,200,000 oz. x $949 = $1,138,800,000

2,200,000 oz. x $868 = $1,909,600,000

 

Rhodium supply is quite difficult to estimate since it is usually not getting registered. However, it normally represents 8% of the recycled PGM by scrap catalytic industries. If we take the base of 3,4 Moz (104 metric tons), this roughly represents 272.000 oz. (7.7 tons) worth of Rhodium.

In 2017, according to our estimates, 272,000 oz. (7.7 tons) of Rhodium were recovered from spent catalysts and the metal performed very well, increasing by 59.4% and reaching $1.105/oz meaning that the global value of recycled Rhodium was:

272,000 oz. x $1.105 = $300,560,000

 

Thus, using these 3 figures, we can now estimate the total value of the scrap catalytic recycling in 2017:

$1,38,800,000 + $1,909,600,000 + $300,560,000

= $3,348,960,000

 

"The autocatalyst recycling industry was worth $3,348,960,000 worth of recycled PGM (Pt + Pd + Rh) in 2017 for a volume of 3.67m. oz. (111.7 tons)."

 

In 2017, 3.672 Moz. (111,7 tons) of PGM were recycled.

We can also imagine theses numbers as solid metal cubes

 

 

The amount of PGM in solid metal cubes

Annual recovery of PGMs if they were solid cube metals

 

 

This is the actual representation of how much PGM was produced in 2017.

As you may see, if these PGM were right in front of you in a room, they wouldn't take that much space. Do not forget that even though they are not immense, their total value is about $3.348.960.000.

 

 

Pt+Pd

 

 

Globally, the supply of Platinum and palladium comes mostly from mining and autocatalytic recycling.

 

So, what do you need to remember from this article?

Around 100 million cars are produced every year with more Gasoline engines produced since the “Diesel Gate” scandal (75m. Gasoline engines; 19m. Diesel engines; 6m. Electrical engines).

Also, approximately 27m. end of life vehicles is recycled every year in the world.

In 2017, with 1.2m. oz. (37tons) of Platinum, 2.2m. oz. (67tons) of Palladium and 0.272m. oz. (7.7tons) of Rhodium recycled from spent catalysts, the market size of the scrap catalytic converter industry approximates to $3,348,960,000 making it the second-biggest source for PGM’s after the mining industry.

Stricter regulations and the growing development of electrical engines will speed up the number of ELV’s in developed economies. This leads us to predict a significant rise in the volume of material recycled, but considering that the demand for PGM’s is uncertain, we cannot predict this impact on market prices…