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Letsrecycle: Q1 figures suggest plastic PRN market could be tight

Date: Tue, 26 Apr 2011

However, the supply of glass PRNs appears to have picked up at the beginning of this year following a fall in supply at the end of 2010.

 

The prices being paid for plastics PRNs have started to rise off the back of the Q1 figures
The prices being paid for plastics PRNs have started to rise off the back of the Q1 figures

The figures - published on the Environment Agency’s National Packaging Waste Database - show that 140,090 tonnes of plastic packaging waste was recycled between January and March 2011. This is markedly lower than the 159,970 tonnes of plastic packaging recycled during the same period in 2010 (see table below).

Meanwhile, 388,497 tonnes of glass packaging was recycled during the quarter – up substantially from 328,712 in the fourth quarter of 2010.

Thomas Rickerby, senior market operator for the Environment Exchange (t2e) PRN trading platform, told letsrecycle.com that the improved performance in glass was probably down to a delay in getting some material reprocessed at the back end of 2010 due to factors such as the snow. Many in the sector had been hoping that the slack would be made up at the start of this year.

He said: “It was a strong quarter one for glass. I think we have seen some of the material which was not reprocessed in December coming over into the first quarter of this year. There has already been a reaction in the market to that. The price being paid for glass PRNs has consequently fallen from £11 to £10 this morning.”

However, a note of caution about the improvement was sounded by Gareth Goodall from PRN trading platform scrap-ex – who pointed out that the recovery was not as great as some had hoped.

He said: "I think people were expecting the glass Q1 number to be around half a million because it was assumed that the snow had slowed collection and reprocessing in the fourth quarter and this would have been "made up" through the first quarter of this year.

“However, that doesn't necessarily look to have been the case. It will be interesting to see what happens given that number was relatively low and that the carry over on glass was tiny.”

Reprocessor and exporter data

MaterialQuarter 1 2010 (t)Quarter 1 2011 (t)
Paper 763,554 764,214
Glass 388,497 449,645
Aluminium 13,927 17,930
Steel 116,627 87,863
Plastics 159,970 140,090
Wood 197,464 176,822
Total recycling 1,640,084 1,636,564
Total recycling and recovery 1,798,190 1,806,366

Source: National Packaging Waste Database

Plastics

On the plastics front, both Mr Rickerby and Mr Goodall said that the PRN market looked tight. Mr Rickerby pointed out that the material-specific target for plastics is one of the only business targets which, along with steel, rises this year – from 29 to 32% - and so performance would have to improve in the remaining quarters if businesses are to fulfil their obligations.

He reported that the price of plastics PRNs has consequently started to edge upwards on t2e, from £3.25 to £3.50 a tonne.

He said: “The three per cent target increase in the business target means that the obligations will increase by around 10% and we estimate we will need around 150,000 tonnes of plastics per quarter to fulfil the obligation. The figure reported is 140,000 tonnes and, while there are two large exporters still to report and this could improve, is below the forecasted targets.

“It is too early to say if we will or won’t comply but it is certainly one to watch. But historically plastics is quite flexible and is good at upping the ante”.

For his part, Mr Goodall said he thought that the low value of the plastics PRN was discouraging reprocessors from registering with the Environment Agency to issue them. Last week, letsrecycle.com reported that the number of companies accredited has fallen by 14% year-on-year (see letsrecycle.com story) .

He said: “Clearly the impact of lower accreditations is playing a role in terms of lower plastic PRN supply. It is a simple supply side response to plastic PRN prices that have been at administrative levels.

“At £1 it doesn't work for most reprocessors or exporters so they don't bother registering. There is obviously going to be a time lag in terms of accreditation levels having an impact on supply and ultimately price but this is probably the first indication.”

Recycling

Overall, the quarter one data shows that 1,806,366 tonnes of packaging was recycled or recovered in the first quarter of 2011, up from 1,798,190 tonnes in the first quarter of 2010 and 1,713,056 in the Q4 2010.

While this represents a fairly positive picture, it is thought likely that the overall packaging recycling obligation for businesses will increase this year because many producers are understood to have put more packaging on the market last year than the year before and it is this data which is used to calculate obligations. All eyes are now on May 17, when the Agency will reveal what these obligations are.

It is also felt by some that the fall in the number of companies becoming accredited to issue PRNs could also have an increasingly big influence on the market as the year goes on.

Category: Recycling
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