Catalytic converter thefts are dropping. It's no coincidence that metal prices are falling, too

Cost of Living8:09Why catalytic converters aren't worth stealing anymore

As the value of the precious metals found inside catalytic converterssteadily falls, so too is the number of police reports being filedacross Canada about the automotive parts being stolen.

Criminals steal catalytic converters, which control emissions from a vehicle, because they contain small amounts of platinum, palladium and rhodium.

Prices for all three metals began climbing in 2020 and 2021 before levellingoff or, in the case of rhodium, plummeting by about 80 per cent from a high of almost $30,000 US per troy ounce in March 2021.

"I've just heard anecdotally that across North America the problem has diminished," said Const. Dani McKinnon, public information officer for the Winnipeg Police Service.

Winnipeg police havehad 25 thefts reported so far this year compared to 1,797 for all of 2022.

It's a similar story in Calgary, Edmonton, Montreal andHalifax, where police data shows substantial decreases in reported stolen catalytic convertersin 2023 afterpeaking the previous year.

In Vancouver, the number of reported thefts reached their highest point in 2023 but police saythefts have been trending downward. As ofJuly 8, the Vancouver Police Department had 541 thefts called in this year, down 14 per cent from the same period in 2023.

Edmonton police have also seen a bigchange in year-over-year thefts,with 330 reportedin the first half of 2024 versus 1,222 duringthe same period the year before.

What happened with rhodium prices?

The soaring price of rhodium was triggered by shortages of the metalas a result of COVID-19 lockdowns andan explosion in 2020 at a large rhodium processing plant in South Africa.

"It completely stands out as a freak event," said Henk de Hoop, CEO of SFA Oxford, a U.K.-based commodity consulting firm.

Rhodium production has now ramped back up, stabilizing supply. Meanwhile, demand has fallen as vehicle manufacturers focus more on electric vehicles, which don't have catalytic converters.

That's translating into a lower trade-in price at scrap metal yards for catalytic converters or,as Dov Dimant calls them, "cats."

"Volkswagens had really expensive cats coming off of Jettas, Golfs. Like that was one of the easiest, most lucrative ones to steal," said Dimant, owner of Vancouver's Capital Salvage.

"Those were 300, 400bucks a pop. Now you'd be looking at about 100 bucks, maybe $125."

No longer 'easy money'

McKinnon says when metal prices were high, "it made sense" for thieves to steal these automotive parts.

"The scrappers weren't being monitored and so it was a quick turnover for a thief to bring one in, and both sides would get a little bit of cash out of it," she said.

"It was easy money."

But now the money isn't as good and boosted initiatives to deter thieves means it's less easy, too.

For example, provincial governments in B.C., Alberta, Saskatchewan, New Brunswickand Manitobahave made it tougher for criminals to cash in on stolen catalytic converters by requiring buyers to track transactions including the sellers' identities.In Ontario, the cities ofBrantford and Kingstonhave brought in similar rules to regulate transactions at scrap yards.

Meanwhile, several cities are making catalytic converters more traceable by offering free etching of the vehicle identification number (VIN) into the car part.

In Surrey, B.C., for example, RCMP say the "You Etch It. We Catch It" program helped bring down catalyticconverter thefts by 76 per centin the third quarter of 2023, compared to the same period the year before.

The risk-reward dynamic

Mirko Draca, a professor in the United Kingdom who has has been researching the economics of crime for more than a decade, says you can draw a straight line between declining metal prices and the reduction in catalytic converter thefts.

"Prolific criminals are very plugged into the market of stolen goods. They know how these price variations work, particularly on metals," said Draca, a professor of economics at the University of Warwick.

To predict and prevent future spikes in catalytic converter thefts, Draca says it's important for law enforcement agencies to keep a close eye on global metal prices.

The same recommendation was made in a study published in May, which analyzed data from police reports and social media complaints in eight cities in California. It found a 10 per cent increase in the value of metals like platinum, palladiumand rhodium results in a 20 per cent increase in catalytic converter thefts.

The report conducted field interviews with active metal thieveswho said they "kick into overdrive" and "take a lot more risks" when prices go up.

A team of researchers led by Draca came to the same conclusions in 2019.In apaper published in the Review of Economics Studies, Draca compared metal thefts in London to metal prices over a 10-year period and found a strong correlation between the two.

"Prices go up, crime goes up. Prices go down, crime goes down," he said.

"In terms of chasing incentives, the only people more rational than criminals are academic economists."