Ben Richardson on the PRN market: November 2020

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Ben Richardson Valpak

A busy few weeks since my last article, with the release of the monthly figures, the quarterly figures and the 2021 recycling targets!

The Q3 figures issued at the end of October, continued to demonstrate that the UK is well on its way to hit the targets with all materials performing strongly. As a result, based on the figures released, paper and aluminium look to have now met their targets for 2020. 

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Taking the monthly figures issued on 11 November, overall, they echoed the Q3 figures and specifically showed incredibly positives figures for paper, aluminium and wood.

Plastic had the second largest recorded quarter in Q3, only behind Q2 2020, totalling 313kt. This was buoyed by domestic processing figures, which increased by 29kt, compared to Q2 2020.  The increase in domestic recycling was across a variety of material types, showing the UK really does have recycling infrastructure and capability to manage a broad range of plastic, if the material is presented in the right form. This is good news for the UK, as exporting will inevitably become more of a challenge in the New Year with legal changes surrounding Brexit and the Basel Convention.

More recently the monthlies did little to suppress the good news and backed up Q3 data. Figures showed reprocessing of 101kt, recovering from last months data, which will lead to the UK reaching its plastic recycling target by the end of November, if the trend continues.

Commercially we have seen a decrease in the value of the PRN from £15, at the last time of writing, to sub £6. Prices seem to be holding and not dropping to the general recycling price but may reach them based on an oversupplied market and recyclers preferring to obtain some value for the PRN, rather than write it off.

Paper showed its strongest quarter so far, 928kt – with export making up a large majority of that – resulting in it also having its strongest quarter. Domestic reprocessing on the other hand was down circa 3% compared to Q2, showing the final hurrah from China could have diverted material from the domestic recycling, due to the price being offered.

From a monthly perspective, the good news continued to flow with the figures showing the highest reported month for 2020, 380kt. All the positive news for paper recycling targets does however mean a drop in value, with paper trading at circa 80p. As mentioned previously paper has nearly hit its target for 2020, so many are now buying for general recycling obligation. This means the price could be inflated due to that demand and will drop further as that obligation is closed out.

A lot of people are looking forward to the back of 2020, for understandable reasons, so it was good news to receive the 2021 and 2022 recycling targets, showing the industry what it is working towards. A mixed outcome for the materials but for 2021 the biggest change, apart from the loss of Recovery, was the drop in wood targets down from 48% to 35%. The majority of material types reduced by around 2%, apart from paper and aluminium, which remained the same as the consultation targets. The only material to increase its recycling target was remelt, which has increased by 5%. Full detail blow.

2020 business targets2021 business target2022 business target
Paper75%79%83%
Glass80%81%82%
Of which by remelt67%72%72%
Aluminium64%66%69%
Steel85%86%87%
Plastic57%59%61%
Wood48%35%35%
Overall recycling75.4%76%77%

Combining the strong UK position for 2020 drives most, if not all, of December’s volume into carry forward and with the release of easier 2021 targets, there should now be a downward pressure in transitional price due to the sheer volume of PRNs to be available in 2021.

Overall, the new recycling targets put little pressure on the marketplace, especially for the wood sector, and so long as the current reprocessors remain accredited, there should be little reason to not to meet the recycling targets for next year. There will be challenges of course, as there is every year, such as Brexit, COVID-19, lockdowns and changes in local law, but the recycling industry is a resilient one and it has done well in 2020 thus far.

Ben Richardson is director of procurement at Valpak

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