Metal Product Substitutions: Stainless, Silver, Palladium and Tin

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I’m allergic to sesame seeds, so when I order a burger in a restaurant, I’m always in the hunt for a good bun substitute. So I thought it might be interesting to take a look at the current state of product substitutions in various metals markets. About a year ago, when nickel was trading at over $50,000/ton, it was almost a no-brainer to consider moving to other grades of stainless, as one example. What with the price of 304 stainless moving from the mid $6000/ton range to $5000/ton today, substitution to 200 series alloys looks a little less interesting, according to this article in Metal Center News.

But what’s true for the goose (in this case stainless) might not be true for the gander. Consider how one jeweler is substituting palladium at approximately $450/ounce for platinum at approximately $2000/ounce. What is interesting here is that if the price of platinum continues to increase, industrial buyers will be the ones to switch to platinum, according to this article. Tinplate producers within Euroffer, the European Confederation of Iron & Steel Industries do not believe that material substitution threatens them despite rising raw material costs. Because the steel packaging industry can maintain relatively low costs for filling, labeling, retail handling and has lower production costs over alternative packaging materials, (e.g. aluminum and glass), material substitution remains a remote threat. In addition, other alternative packaging materials such as plastics share many of the same cost [dis]advantages as steel, according to this article.

Forget about packaging or jewelry for a moment. My learned colleague described the enormous cost reduction opportunity available at the US Mint if they consider product substitution.

And finally, another precious metal, silver (one of my personal favorites) finds itself in a unique position of being switched to as opposed to switched from a very interesting application. According to this article, Mitsui, the Japanese conglomerate indicated that it had developed a process that would replace platinum with silver in certain diesel-engine catalytic converters. Though industrial machinery makers are the target audience for this conversion, Mitsui has made no secret that it also intends to offer this product to the automotive industry. Well surprise surprise. At $17/ounce, silver is looking like quite a mighty bargain.

Has your company done any recent product substitutions? Drop us a line and tell us about it at: info@agmetalminer.com

–Lisa Reisman

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