Ben Richardson on the PRN market: March 2021

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Ben Richardson Valpak

As we all know, from Martin’s and Colin’s articles, the value of plastic and cardboard especially, has increased in the past few weeks.

Driven by demand for the finished product across the globe, due to our buying habits, has meant there has been an insatiable demand. This has been supported by an increase in value for plastic PRNs, but that has not been reprecipitated in the paper PRN, for the card.

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While last month’s report highlighted the best month for recycling volumes in the past four years, February has come down with a bump.

Compared to last year there was 46.2kt less voluntarily submitted to the agency. This was predominantly in plastic and glass, and as we know glass remelt has had an increase in targets this year.

While this change in target is positive for recycling, it has put a small challenge into the remelt market, but not one they can’t overcome.  

As everyone knows cardboard is becoming ever more valuable, with prices ever escalating for ‘brown gold’.

The mills are starting to become more competitive for material and recycling as much as the time, permits and resources allow. This has been reflected in the monthlies, with a run rate of over 286kt, the second-best month since 2016.

It is inevitable that as the finished product demand drives the recycling, the PRN generation will go hand in hand.

There are also now some question marks on the validity of the protocol on mixed papers, currently sat at 34.5%. Some of the recyclers are reporting up to 60% cardboard content in mixed paper grades now, mainly due to the household collection material make up.

As a result, that ‘PRNable’ volume is being lost in the system and not being accounted for accordingly. While it is not a problem for the UK complying, it feels like it is worth exploring further.  

Commercially, when I wrote last month’s update, the price was around the £5.50 and it has remained there ever since. With the front-end prices being so high, encouraging more recycling, there is less reliance on the PRN price currently. So long as this finished product demand continues, the PRN price will stay or even drop below the £5.50. As that demand wanes though, that is when we could see heads turning back to the PRN for price support, driving it up. 

Plastic has not seen a huge change in volume, on the current run rate, but compared to last year we have seen a decrease of 22kt. While it seems a drastic drop, don’t forget this time last year the price jumped from around £235 and finished at £335 in February.

Compared to this year where it has moved from £120 to around £130, by the end of the month, which could explain why February 2020 was such a strong month for recyclers. The monthlies did have a small impact, with price dropping from the £155 to £150, but rates have held since then and bobbled around those figures, at the time of writing this.

On a much wider note, the consultations are due out this month, with the reform on Producer Responsibility in 2023 or 2024. This will have huge repercussions for the recyclers, exporters, and producer compliance schemes like Valpak, it should be read and responded to by all involved in the system. 

Ben Richardson is director of procurement at Valpak

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