The past month has been a bit of a mixed bag with regard to the PRN market. The market for some PRNs has stabilised, some have seen a dip in prices, and some materials have risen in price.
There is an industry–
wide concern that the UK PRN obligation based on 2021 placed on the market data may be tight. This is due to lower waste arisings this year as consumer spending habits are being impacted by the cost of living crisis and there is simply less packaging waste being collected and therefore recycled. The price support that the sustained high PRN prices have offered in recent months should help the UK meet its obligation.
Plastic PRN prices have remained relatively stable over the last month, generally trading between £290/t – £305/t. It is likely that prices will need to remain at least stable for the remainder of the year to pull additional material through the system so the UK can meet its plastic obligation.
Pricing dynamics between the price of virgin and recycled material have also impacted the market and placed a greater emphasis on the value of the PRN for recyclers. The Plastic Packaging Tax is in full flow now in the UK, so the demand for recyclate should continue to rise, increasing the amount of plastic recycling and thus generating more PRNs in the final quarter, which could ease prices down.
The paper PRN market is the good news story of the past few weeks, with the price peaking around £35/t, which was the highest price for the past 20 years. In recent days, following a relatively strong performance in the last set of monthly data, the price has dropped to about £25/t. While this is certainly moving in the right direction for producers, expectations should be tempered for the remainder of the year as some major paper reprocessors will have and have had extended shutdowns. This is typical at this time of year so not a major concern, but it will still impact paper volumes.
The price of glass PRNs across both remelt and other have continued to rise over the last month, peaking recently at £200/t and £160/t respectively, with no real suggestion that the steady price rises will slow. As with last month, the increases are primarily driven by a shortfall in the supply of glass PRNs for the overall glass obligation, particularly acute in glass other. The current glass other price is not reflective of the cost of reprocessing glass aggregate in the UK, but a reflection of the supply of PRNs and the ability for the UK to meet its target. With the World Cup coming down the line, we should start to see higher waste arisings of glass and aluminium both commercially and in household, helping more volume be recycled to try and ease pressures.
The aluminium PRN market has followed a similar trajectory as glass, with reasonable monthly figures yet a steady increase in price. When this column was last published, aluminium PRNs were trading for around £150/t, and this has increased to about £200/t recently. The price rise is predominantly due to a perceived shortfall in the PRN supply, particularly future supply and potential impacts on PRN generation due to energy ration. Following the publication of the Q3 figures at the end of October, the UK position and PRN requirement in Q4 could help put downward pressure on prices.
The steel PRN market has seen a relatively steep increase in prices, rising from around £38/t last month to £65/t this week. After a significant volume of PRNs in Q2, and relatively good volumes in the monthly figures, concern around PRN generation for the remainder of the year has tightened the UK position and caused a price spike. Similarly, to aluminium, if there are good volumes published in the Q3 figures in October, prices could stabilise depending on the UK position.
Over the past four weeks wood PRN prices have dropped from the peak of around £30/t, to £25/t. This has come because of both strong wood and paper volumes, which have improved the outlook for the UK meeting its general recycling obligation.
James Armitage is commercial operations analyst at Valpak