CATs Corner – Episode 8

Nick:
All right. Welcome everybody. To another episode of Cat's Corner with our esteem panel. Got Pete and Scott from Zaner. How you two doing today?

Pete:
All good guys.

Scott:
Doing well.

Pete:
All good. We got our first snowfall this weekend, so I imagine you guys got hit already, too. Huh?

Nick:
Not here in the valley, up in the mountains. We honestly don't get a lot of snow in the valley over here.

Pete:
Gotcha.

Nick:
But no, we'll kind of see what kind of winter we get. Weather permitting, we got a lot of jobs that do on the scrap metal side. The catalytic converter side, we just got back from SEMA a week ago.

Pete:
How'd that go? I heard you guys had a booth. Right?

Nick:
We did a booth there. Went great.

Pete:
Outstanding.

Nick:
We spent a lot of money to do it. So we were a little nervous what the kind of payoff would be, but it was fantastic. So many people.

Pete:
I saw some pictures of your booth, there was a lot of people standing around it.

Nick:
Yep. Yep. A lot of people are interested in our deal. A lot of people seem interested to deal with a real company to sell their converters, not the fly by night guys driving around with cash-

Pete:
Yeah. There's a lot of that going around.

Nick:
... guys with real paper trail, a legit company. So it was real, real nice to, to a lot of them. And we plan to do it again next year.

Pete:
Oh, wow. Okay, great. Scott how was your weekend-

Nick:
That was great. It was good. We saw including Copper, we saw PGMs go up a little bit towards the end of the week.

Pete:
Oh yeah.

Nick:
And copper went up, what 10 cents in one day?

Pete:
One day. One day, Evergrande made their payment. As you know, I posted a couple of articles out there for everybody, and I know you commented on it. Actually, it was interesting because it kind of shocked everyone, in that they made their payment and then they paid their back payments. They were due for interest on all of their bonds for 22, 23, and 24. So it was a real bullish shot in the arm, and copper exploded. When you see a company that has a million condos with an average of 278 lbs copper per condo usage, come back into the fold it's a big deal.

Nick:
So do they have a million condos in back quarter? Is that what they have?

Pete:
I do not have the succinct breakdown. But the Communist Party and the bank that they used to own, which they had to sell for revenue, said that, on the books, they were holding a million units. How they were holding it, whether they were done, waiting for payment, whether they were pledged for? I don't know.

Nick:
Got it. So little unclear there, but they're back in the fold. We see some movement at least on copper, which...

Pete:
Yeah. [crosstalk 00:03:13].

Scott:
It was perfect timing.

Pete:
Yeah, perfect timing. Yep.

Scott:
Perfect timing, going into the fall. Everybody's got an early Thanksgiving present. Something to be thankful for and nice Christmas gift. And I was speaking at the E-Scrap Conference about volatility and just wait, you're going to see 10 cent, 20 cent moves out of nowhere. It was just perfect timing, just for everything.

Nick:
Yeah.

Pete:
Well, let's look at platinum palladium. I mean the magic number in palladium for our technical people, 2150. We had a $44 rally blasted right through it. Really, really came out gangbusters. A lot of people on the technical side that keep the charts, that looked for resistance were really shocked, because that was a really big number. And we're at 2158, roughly. Platinum, by the way, 1065 was the magic number for a lot of people. And we ripped right through that, and today we're trading 1091. Which means we're looking at 1100 again. So all of our guys like you, Nick, are having a real good day.

Nick:
What about rhodium? Do you guys see rhodium doing much?

Pete:
I don't chart rhodium because here's the problem. The only place that used to trade rhodium, because I don't have a place to lay off that risk. The only place that used to trade it went under a number of years ago, it was a South African exchange, and they had samarium, they had rhodium, they had some other stuff and, and I don't, I don't have that. So unfortunately that's gone. So yeah.

Scott:
I've got a little bit of info for what's going on with rhodium. So it's so closely to vehicle production.

Pete:
Yeah.

Scott:
And we're seeing the chip shortages beginning to ease and-

Nick:
Yep, I learned that last week.

Scott:
... auto makers are starting to increase their production. I also believe that's contributing to some of the bullish sentiment for these metals as well.

Pete:
Yeah. Because there's a little pinch rhodium and in every cat, right?

Scott:
Mm-hmm (affirmative). Yeah.

Pete:
Yep.

Nick:
Yep. Yep. But definitely, when it was close to 29, you saw those cat values just getting insane.

Pete:
Yeah.

Nick:
I think people kind of get used to that and now when it gets cut in half-

Pete:
Yeah. Like when I went to 16, people were definitely falling out of their chairs. That was quite a break.

Nick:
Yeah. I think it's more realistic, where it is now than at 29 number.

Pete:
I think Scott really hit it on the head. In that, we're going to... $47 moves in palladium, $50 moves in platinum, 10, 11, 12, 1200 ticks in copper. These are going to become commonplace again. We're going to see volatility, as traders refer to it as vol, we're a hedging operation, we mitigate the at risk, and I think we're going to continue to see big swings again. Because people are coming in and throwing in very large orders. There's a lot more product moving around than there was before.

Nick:
Which that's a good sign for the market.

Pete:
Yeah. Very good sign for the market. Absolutely.

Scott:
And producers in general. Producers of product are more aware and conscious of securing their supply. You're seeing end manufacturers looking all the way to the start of their supply chain and making significant investment into that.

Nick:
Gotcha. That makes sense.

Scott:
Yeah. And the mergers and acquisitions continue. The Stillwater, mine in Montana, just solidified a deal to buy London mineral, Lonmin, which used to be The London Norian Minerals Corporation.

Pete:
Right.

Scott:
That's a huge acquisition of valuable world real estate in the Bushveld Complex. And that's an American company making an investment over in South Africa.

Pete:
And that really sings out to some of the bigger players, Nick, that are saying, "you know what? Platinum palladium is still something I want to own." We're seeing some pretty big financial investment into that area. Look at the numbers came out Thursday evening, Friday morning. South Africa posted their platinum palladium production is down 7.5% on the quarter. That's a big dumper. That's significant. So we're seeing less product being mine and, subsequently, less availability here. It's going to continue to do what it's doing. It's going to reflect the price on the market.

Nick:
Gotcha. So it's good to be into converter recycling right now.

Pete:
Absolutely, right. And you know what? This rally, I know you guys have that terrific program where people just mail their stuff in. This is not a bad time when you're 2150, 2160 in palladium, and you're looking at 1100 in platinum. That's a big rest. It's three, $400 an ounce more than it was for platinum. If you sit on some cats and they're in your yard, you might think about throwing them in the box getting them off today.

Nick:
Yeah, no, I think the market's pretty strong right now. I think a lot of people we're waiting for those old markets at 20, 28,000 rhodium and there's a lot of people [crosstalk 00:09:00] are hoping for platinum to get above 12 again. And I think it's on its way to get above 12.

Pete:
Yeah. But you know what? The question to me comes, do you want the money in your pocket now so you can buy more converters? Or do you want to sit around longer and let it rot in the yard?

Nick:
Unfortunately, for some of these shops, they put them in the corner and inevitably if they leave them in the corner for too long they seem to grow legs and go somewhere else. So if they just ship them to us, they'll get paid. And it's transparent.

Pete:
Yeah.

Nick:
We get them payment as soon as we receive it. It mitigates a lot of the risk of internal theft too.

Pete:
Well, it's interesting because that's something that we don't think about on our side and it's good you mention it. Absolutely.

Nick:
Well, great. Let's try to keep everybody posted. Well, at least try to do at least one or two of these a month.

Pete:
Sure.

Nick:
We could all fit it into our schedule. We'll try to get it back to once a week, but-

Pete:
All right.

Nick:
... I know everybody's busy. So I appreciate you guys taking the time. If you have anything else to add, feel free, but if not, we'll let everyone have a good week.

Scott:
Oh yeah. I do. I want to just bring everyone's attention to pull up a 20 year gold spot chart and give yourself a little technical analysis show because you're looking at just a beautiful image of natural markets playing out over a decade time span. Yeah. 20 year gold chart, good time. Good time.

Nick:
All right. I'll have to do that. Okay.

Pete:
All right. Okay, everybody. Thanks for dropping in. At Zaner metals we're available here to help you mitigate risk as well. You can sell copper. Platinum palladium, gold, and silver at any time on our hedging platform, which is called Tornado. It's been around for decades and it's here for scraper and it just does a great job.

Nick:
Awesome. Thank you, Pete. Thank you, Scott. Everyone have a good week.