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PRN trading remains steady in September

Date: 1/10/2013 | Author: Joe Savage

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SCM Environmental's Joe Savage gives his monthly update on the PRN market

Trading of PRNs has remained relatively strong throughout September, and with little in the way of external developments the prices across most grades have remained stable. With buyers looking to close off some positions to adhere to their Operational Plans we have seen strong levels of demand, in particular on the plastics front. This comes as no surprise given the market conditions thus far this year, higher obligations and indifferent supply has gradually forced the PRN price to above £60.00 where is currently trades.

With large volumes of plastic PRNs trading throughout the month, there seems to be little in the way of evidence to suggest that the price will start softening significantly anytime soon. In fact, as the year continues there looks to be a realisation from buyers that in order to close their position they will unfortunately have to pay a higher than budgeted cost which has helped support the prices paid for PRNs throughout the month. With material trading negotiations now also heavily reliant on PRN revenues there does appear to be little scope for cheaper PRNs in the short-term. The Q3 reprocessing data is scheduled to be provisionally released mid-October, whilst an oversupply at this point seems unlikely, surely only an excellent set of numbers would see the plastic PRN price significantly drop. With these anticipated figures in mind, prudent buyers have taken the opportunity through the month to secure volumes in good time and ensure their strategy remains on target.

Glass also continues to trade higher, re-melt PRNs are now appearing to plateau at circa £70.00 in reasonable volume. With continued uncertainty surrounding the glass markets and PRN availability, much like the plastics the price remains strong with little suggestion that that this will ease presently. Whilst remelt has hardly fluctuated throughout the month, aggregate PRNs have traded slightly more erratically ranging through £40.00 - £50.00 in varying volumes. With buyers still concentrating on their minimum remelt requirements, demand for aggregates has naturally tailed off which has helped to maintain the spread between the two grades at roughly £25.00. Equally, in the run up to the pending reprocessing data sellers have been less forthcoming with remelt PRNs, whether this is by design or is a true indication on availability remains debateable but the net result is currently a firm PRN price.

As an aside to the trading for 2013, the results of the WRAP investigation into the glass supply chain are eagerly anticipated with speculation growing in terms of what recommendations may surface as a result. Lower targets are mooted to ease the market situation, however, quite how quickly this could get transposed through regulatory change is unclear and would surely need further consultation on the impacts this may have for the UK.

As has now been the case for several editions, the remainder of PRN grades remain less problematic and as a result continue to trade well below £10.00 per tonne. Metals retain the most value, by nature of their heavier reliance on global material markets, but with strong supply reported in Q2 and seemingly still easily available during Q3 it is not anticipated that we’ll see many difficulties in making compliance this year. Steel has slightly touched up in recent weeks and a quick glance at the Q3 reported volumes will undoubtedly be worthwhile the year to date oversupply should keep this material relatively steady. Paper and wood tickle along as they always seem to do, many will now be seeking out the Q4 bargains but if previous years are anything to go by being the last buyer in the shop does not guarantee the cheapest sale.

As the compliance year yet again moves on at a pace, with these final usable reprocessing figures (Q3) looming it is sure to be a very interesting Q4 indeed. Many buyers, direct registrants in particular will be ensuring that their obligations are covered off in good time and we should now see a steady flow of businesses ‘closing’ off on NPWD. With this in mind, Q4 will also see the groundworks start on the 2014 compliance period for the vast majority of us, and as always the SCM forward PRN markets will be open for business providing security of supply and peace of mind for those who trade in advance. With producer data also due for refreshment Q4 is an ideal time to complete as much preparation work as possible, here at SCM we’re well placed to assist direct registrants with their data collation, reporting and training needs for the next required submission…it will be here sooner than you think.

Category: Updates
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