PRN Market Update – Q1 2016 – Strong Performance for all packaging recycling materials with a slow start for Glass

Packaging Recycling Quarter 1 Interim Report – April 22/04/2016

Today the Environment Agency released a strong set of numbers in the Quarter 1 Packaging Recycling Interim Report. The report, whilst not finalised until next month, shows a good recycling performance for Paper, Plastic, Steel, Aluminum, and Recovery with all materials on track to meet targets.

The exception to this is Glass, which has 1% target increase, is off to a slow start to the year, this could cause issues later in the year if recycling performance remains flat, and could encourage a greater price differential in Glass ‘remelt’ and Glass ‘other’ should Quarter 2 show no sign of pick up.

Glass PRN Projected Supply Demand 2013 – 2016

Steel Export Recycling have managed to pick up the slack left by the issues around UK Capacity, and Aluminium from Incinerated Bottom ash has added an additional 4,000 tonnes for Quarter 1. If this continues 2016 Packaging Compliance Targets should be met with relative ease, however we keen a watchful eye on the steel situation in the UK.

Plastic has continued on from the bumper Q4 of last year is currently at a comfortable level to meet targets, there is however still challenges to maintain this performance throughout the remainder of the year.

Paper Recycling continues to perform well and with the additional volume coming from the revised and increased % of packaging now allowed for mixed paper recycling, the price pressure on General Recycling and Wood in 2015, should not be a problem in 2016.

In summary a good start to the year, with Glass a slight concern if the drop in performance continues.

PRN Market Model – Projected Supply v Demand 2016

Background

Under the Producer Responsibility (Packaging Waste) Regulations 1997 – 2016, Obligated Producers, any UK Company with a Turnover of £2m+ and handle more than 50 tonnes of Packaging, are required to offset annual recycling and recovery obligations, by purchasing Packaging Waste Recovery Notes, PRNs. Each Packaging Material (Paper, Glass, Steel, Aluminium, Plastic, and Wood) has its own recycling material specific target, set by the UK Government, and free market supply and demand price driven market, PRNs.

Packaging Waste Recovery Notes, PRNs, have an individual material market value which fluctuate depending on perceived DEMAND (the Total Recycling Obligations of all 7,000 UK Obligated Companies) and the SUPPLY (the actual Recycling and Export of Packaging Waste from within the UK). Where there is a perceived market shortfall in a packaging material price will rise to stimulate more recycling in the market, and where there is surplus, price will fall.

Obligated Companies / Producers submit and declare the Packaging they place on the market for the previous calendar year. This data allows Recycling Obligations to be calculated against the annual Government Recycling targets. The data is submitted once a year.

Packaging Waste Recovery Notes are issued by Accredited Reprocessors, Recyclers or Exporter of Packaging Waste. They report the actual amount of recycling on a Monthly basis to the Environment Agency / SEPA / NIEA who then issue a Quarterly Report highlighting the total UK Recycling Performance. PRN prices react according to the perceived market conditions.
The market experts at Co2 Compliance, have worked in this specialised and sometimes volatile market since 1999, and share regular commentary and market analysis with our clients. Our goal is to minimise our clients bottom line cost of compliance.