A report commissioned by Resources & Waste UK has shown there is no easy answer to reducing volatility in the recycled materials market.
However, the Managing the Risk from Secondary Ray Material Price Movements report said risk sharing should be a priority to help in the short term.
Resources & Waste UK chief executive Steve Lee (pictured) said: “Secondary raw material (SRM) price volatility has always been an issue, but it has become more pronounced and bites harder in times of sustained downward trends in prices.
“At the same time, our industry’s exposure to this market volatility has increased as recycling rates have risen and the revenue from SRMs has become more important in offsetting overall collections cost.
“Not only is this putting a significant strain on our industry at present but, unresolved, it undermines our ability to deliver further improvements in recycling performance and will be a serious drag on progress towards more circular economic goals.
“Ultimately, fundamental change is needed at a European level to improve the value chain for recycling, but there are mitigating measures that the UK industry can explore in the meantime.”
The report puts forward a number of recommendations to better cope and manage market risk.
It proposes cross-sector collaboration to develop a more balanced and transparent risk sharing framework between partners in the supply chain.
Longer term, it recommends exploring more fundamental change, including amending the Producer Responsibility regime to improve the value proposition for recycling, and the setting up of an independent fund to act as a buffer when market conditions are tough.
Recycling & Waste UK is a partnership between the CIWM and ESA trade bodies.
Resource Efficient Business produces the weekly Intelligence pricing and analysis report that is used by most of the UK’s biggest recycling and waste companies to give them a competitive advantage.
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