Recycling prices and market commentary: 10 December 2021

December 10, 2021

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R3 or R12 was the big talking point in this week’s market as the Environment Agency in England yet again began cancelling plastic PERNs.

In October, the Environment Agency in England wrote to exporters notifying them that it would only accept PERNs sent to R3 destinations in the Netherlands. Essentially, an R3 facility is one where the material is recycled, while an R12 facility is a sorting or transfer station (this is a bit simplistic but provides an overview).

This meant that plastics exporters to The Netherlands needed to find out whether the facilities they were exporting to were R3 or R12. But this categorisation is not printed on Dutch environmental permits and its agency equivalent there would not confirm to companies in the UK the categorisation of its members.

Of course, these sites would have been accredited as suitable by the Environment Agency at the beginning of the year, and exporters would have assumed they were suitable destinations.

But this week, the Dutch authorities provided the Environment Agency with a list of R3 and R12 facilities in The Netherlands, and it began cancelling PERNs that were claimed on R12 facilities.

The problem is that we are in the last few weeks of the 2021 compliance year, nobody knows how many PERNs have been affected (it could be hundreds of tonnes or more likely thousands) and some plastic exporters are facing having to replace these PERNs late in the day.

Being so late in the year, it could also affect the 2022 compliance year depending on how much carry-over is taken into next year.

It also raises the question of what will replace the half a million tonnes of export PERNs needed in 2022 if The Netherlands becomes a difficult destination for English material.

Just to be clear, at the time of writing, the agencies in Scotland, Wales and Northern Ireland hadn’t followed the example of their English counterparts so companies registered with them have not had this issue.

More on what this has meant for markets below.

In terms of other market conditions, paper grades were stable, while there was a change for copper in metals.

The pound was stable at $1.32 against the dollar and was mostly at €1.17 compared to the euro this week.

Recycled plastics

As mentioned above, R3 or not R3 was the question this week for the plastics market.

This has created a great deal of uncertainty for both the physical and PERN markets. For the former, it means trying to work out which facilities are R3 in The Netherlands if you are registered in England, while there is uncertainty around how many PERNs will be placed on the market.

The underlying market for bottle grades is really strong though, with both domestic and European demand ahead of Christmas surging.

Film grades saw this surge in demand recently, and remained stable. This was partly due to uncertainty with The Netherlands market a strong one for film.

In terms of PRN/PERN values, the current price remained at around £60 as people waited to see what was going on. The December transition price was more like £80.

Forecast prices

	1-week	4-week
PET	408-414	405-411
HDPE	700-706	694-700
LDPE 98/2	435-441	440-446

Recycled paper

This week continued to be about January as the market looks ahead to next year when it comes to pricing.

As a result, prices were stable.

With the effective deadline of getting material onto trucks to get into Europe of next Friday, those trading there were focusing on logistics.

Buyers to Turkey, Asia and India were also dipping in and out of the market in the hope that prices will come down further.

This stasis effectively meant little changed.

Although the PRN/PERN price is currently around 50p, the December transition price is approximately £3 per tonne.

Forecast prices

	1-week	4-week
OCC	125-129	124-128
ONP	142-146	142-146
Mixed	99-103	97-101

Recycled metals

Copper was up £200 per tonne this week in an otherwise stable metals market.

For cans, the aluminium PRN/PERN price was currently around £3 per tonne, but the December transition price was around £14 per tonne. Steel PRN/PERNs remained quiet.