PRNs and PERNs remained the topic of conversation in the recycling market this week.
Following the Guardian’s publication of a story on alleged recycling fraud last week, this week saw the publication of the Q3 data from the National Packaging Waste Database (NPWD).
While the data generally proved positive towards targets being met, there are a few factors that helped to push PRN/PERN prices up this week.
First of all, there is an awareness that markets for materials in Q4 will be harder to find, especially if China and other Asian destinations are involved.
Secondly, the general obligation looks tight, as previously this would have been filled using predominantly paper and wood PRNs, but these are currently in demand due to reduced exports and tougher targets respectively.
Indeed, the overall trend was that recycling volume fell a touch in the third quarter of the year after making gains in the first half. The hope will be that it will not fall too much further in Q4, although the expectation is that it should be tougher to find recycling markets than it was even in Q3.
Those who are still exporting to deep sea destinations benefited from a weaker pound at $1.28 this week compared to $1.30 last week. Against the euro, the pound eased slightly below €1.13 after being just above it a week ago.
As mentioned above, the main story for recycled plastics prices this week was to do with the NPWD data published on Sunday.
Trading had been sluggish before the announcement, while this week was a case of understanding the impact. Some of course were off for half-term too.
With exports falling by around a quarter on Q2, this was a significant, but not unsurprising drop – especially as the first two quarters had been surprisingly strong.
UK reprocessing increased by a touch, but not enough to make much of a difference.
While plastics look set to meet its target, it might still be a bit bumpy along the way until the end of the year. A high PRN price looks set to stay to ensure the target is met. Indeed, it is now back above £70 per tonne, after dropping just below in recent weeks.
This is likely to provide support to the physical price of plastic packaging grades over the coming weeks, and this meant there was no change in physical prices this week.
Although paper volumes recycled in Q3 were up on Q2, according to NPWD, they were still low compared to the last few years. The reason for this was predominantly falling export volumes to China.
In previous years, an excess of paper has helped to meet the general obligation, but this is looking much tighter this year. Paper PRN’s are now around £20, which even a couple of years ago would have been seen as a crazy price.
For those able to access the paper PRN, it is providing a nice bit of extra margin.
But the problem is that OCC, which provides the bulk of PRN-able paper, is falling in demand and price.
While Chinese buyers were still in the market this week, they were less active by far and were paying prices much closer to the rest of the market, even for China specification OCC.
It was possible to achieve £95 per tonne, but more likely to be £10 to £15 lower. For non-China export and domestic markets, £70-£80 was more likely depending on destination and quality.
The expectation is that November will be a tough month, and some hope that December might see increasing Chinese exports depending on confidence on quotas.
One positive is that Mark Lyndon will be exporting to Malaysia following the announcement of a new Lee & Man mill there. Lee & Man also has a mill in Vietnam, as do Nine Dragons, and it appears that some of the slack lost to China will eventually be taken up by other South East Asian destinations.
Lee & Man is also looking at building a mill in Myanmar as first reported by REB Market Intelligence.
Steel looks well on target to meet its 2018 recycling target, according to the Q3 NPWD data. Despite this, because of the general recycling shortfall, the PRN price is tracking paper prices so has remained strong.
Aluminium had a very good Q3, and looks to easily meet its 2018 targets. The PRN price remains strangely and suspiciously high at £67-70 currently.
In terms of physical metal prices, the steel price increased by £10 across the board including cans.
Brass grades dropped by £50 per tonne, in what was otherwise a pretty static market.
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