Ben Richardson on the PRN market: February 2021

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Ben Richardson Valpak

2020 is finally put to bed for packaging compliance, with the end of January seeing businesses and producer compliance schemes complying for the year. 2021 appeared to have a slow start, with businesses finding their feet in among all the political changes, logistical nightmares, and red tape, but the monthly figures have suggested a much more positive outlook.

Overall, the monthly data shows the highest volume of recycling for the past four years, by circa 53k tonnes. Monthlies are of course voluntary, so people may be submitting more data than they have historically, but it does demonstrate that material is still moving and PRNs/PERNs are being generated in these challenging times.

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With the lockdown end date still an unknown, regardless of the media stories, the utilisation of finished cardboard product, for home deliveries, has put huge strains on the paper making supply chain. This has seen an increase in the value of the cardboard material globally, as reported weekly by REB Market Intelligence, but has had little to no impact on the value of the PRN.

Since the start of the year prices have stayed around the £6.50 mark, but once the positive monthlies were released it has begun a small decline and is now trading around £5.50.

There was some initial concern in the marketplace at the start of this year around paper PRN generation, not a risk to UK compliance, but enough to cause some stress in the market.

This has been quashed, for now, as demand from the export market grows, lower wood targets means more wood PRNs for general recycling rather than paper, and this unprecedented demand for finished product. This is reflected in the strong monthly figures of 250k tonnes, which compared to 2020, is 70k tonnes higher this year.

If the run rates continue to grow, as it tends to do so, that is clearly demonstrating that the UK will easily meet its paper target, reducing the price of the paper PRNs in the long run.

The plastic position, however, has lots of people scratching their heads. As widely reported, there have been many challenges to move material abroad at the start of the year, for plastics particularly.

Combined with the Agency’s greater focus on fraudulent activity at the end of 2020, driving out poor and illegal practices, you would expect a drop in plastic PRN and PERN generation at the start of 2021. Incorrect.

The plastic monthlies showed a 5k tonne increase, compared to 2020, making it the highest volume reported in the first month of the year.

This could be explained by a drive by reprocessors to complete monthly figures, but also could be linked to an increase in UK processing and material still being exported, albeit under tougher restrictions. The impact of this saw a small drop in the market, which has been consistently around £120, down to £112 and still falling. Either way many people will be waiting to see what the compulsory quarterlies tell us, which will likely confirm the UK is in a strong position.

Ben Richardson is director of procurement at Valpak

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