Well, that is 2021 completed and 2022 is now in full swing. There was a flurry of activity at the end of the compliance year mainly in glass remelt and plastic, but it would appear there were no issues with the UK complying in 2021.
We will see any impacts of carry forward volumes and the new placed on the market (POM) in the coming weeks.
As per the usual market dynamics, February is always historically lower than the average run rate for the year. Driven by a slightly shorter month, alongside the focus in complying and sorting out transitional volumes by the end of January.
Plastics volumes processed were 46kt, which is just a bit less than 2020, but around 8kt lower compared to last year. This could be linked to the ongoing work, by the agencies, to ensure that packaging accreditations and PRN generation is valid and as such minimising any fraudulent activity.
Therefore, prices have been swirling around the £65 to £70 in the past week or so, as the market tries to find a consistent trading pattern, in what is traditionally a volatile market. The work being carried out by many businesses to reduce the amount of plastic they use, both from a sustainability and plastic tax point of view, should start to be realised and looking forward, a lot will depend on the confirmed carry in volumes and POM. This will drive the price expectations in the coming weeks.
Paper has a similar story to plastic, in that volume decreased on last year (50kt), but up on 2020 (22kt). Demand for finished product is still there, so volumes will continue to move through the system, generating the PRNs. There is an expectation of high carry forward, and as such the UK will once again be in a surplus, even taking into account the general recycling, keeping the price low for the year. Trading has been around the £2 mark, but it is envisaged that will drop in the coming weeks.
Glass remelt continues to be the hot topic into 2022, driven by the 2021 price and perceived market shortages. Prices are currently around the £70 mark after climbing in recent weeks. POM 2022 and Q4 2021 figures will have a real impact in this market, as the February figures were 2kt less than 2021.
Aluminium is trading at £15, which feels artificially high due the expected large carry forward and should come down in price, even with 2kt less volume in February between 2021 and 2022.
Steel hovers around the £9 mark, even with the second lowest February number in the past five years, which again points to high carry forward volumes. Steel generally has inconsistent reporting, so doesn’t appear to be any concerns around a short market.
Wood is bobbling around the £1.25 mark, even though there were lower figures reported compared to this time last year. We see these fluctuations every year with either ~4kt or ~12kt being reported for the past five years.
It is worth noting recycling targets have all gone up this year, bar remelt and wood, but that has not impacted the market – http://npwd.environment-agency.gov.uk/
Ben Richardson is director of procurement at Valpak