The volatility in the packaging recovery note (PRN) market this year is causing difficulties.
The extraordinarily low first-quarter returns for glass are so surprising that nobody quite believes them. And while the price has risen, it has not reached the level that would be expected to be typical for this time of year.
On the other hand, if the second quarter comes in below 400,000 tonnes, the glass PRN will become alarmingly expensive.
How much this will affect glass prices depends on market confidence. The danger with glass prices moving up in line with PRN values (100% price subsidy) is that when the PRN drops, reprocessors are left paying too much for glass and cannot react quickly enough, especially if the drop is large.
Now that finance directors are running everything, we are unlikely to see massive swings. There is a general reluctance to speculate on the PRN price because everybody has been burned at some point. But it must be good news for glass sellers to see a steady climb in the PRN value.
The Q2 numbers will be crucial and dictate the rest of the year.
Another concern is the end- of-waste criteria.
As far as I can see, one way of reading the likely criteria is that glass will not cease to be a waste until the ceramic content has been reduced to 100g per tonne. If this is so, where does this leave aggregate as an end use?
Some countries in the EU do not allow glass to be used in this way. While I do not believe that aggregate should be a preferred option, we do rely on it for our reject stream.
I fear that the definition of waste may turn into one of interpretation. If this happens, the Environment Agency may become the enforcer of technicalities rather than the protector of the environment.
The best thing about glass recycling is the huge demand for the finished product. The problem has always been achieving the impossibly high-quality expectations of the remelt industry. Combine this with an ever-decreasing quality of feed material, and the issue becomes critical.
When we received our first truckload of glass from a multi-material MRF, I was quite stunned and sent it straight to aggregate. But once we realised that this was indeed the kind of glass that we would have to deal with, we spent the next three years trying to develop a plant that could reduce a ceramic content of 12-15kg per tonne down to 10g.
I am glad to say that three of our processing plants can now achieve this and, from our point of view, there is no reason why any MRF glass, regardless of quality, should not be processed back into remelt.
This, of course, does not mean that it will. Unfortun-ately, sending glass to aggregate can still be the cheapest option. In fact, if the PRN value drops too low, it can be cheaper to use this glass to build a ‘road’ in a landfill site than to transport it to a reprocessor.
The differential PRN may help to rectify the situation but, equally, it may not.
I am not entirely convinced that we will be sending as much tonnage to aggregate as assumed - time will tell. But we are trying to justify further investment without the certainty of the necessary PRN revenue to pay for it.
Europe decides on cullet quality to meet end-of-waste criteria
The report by Tim Gent was written before the European Commission’s Technical Adaption Committee decided on the quality required of glass cullet to meet end-of-waste criteria.
Members ruled that cullet used in aggregates would NOT qualify as a new product or secondary raw material. It would still be treated as waste, and Defra will now have to transpose the decision into national law.
Rebecca Cocking, head of container affairs at British Glass, worked with the Commission’s Joint Research Centre (JCR) on the glass criteria.
She told MRW: “What the Commission adopted is an end-of waste-specification set based on remelt, which means it is focused on greater environmental benefit. The JRC decided to set fibreglass as the minimum level we have to achieve. We are pleased because [the decision] also supports what Defra has put forward with regards to reducing the amount of glass sent to aggregates.”
Cocking pointed out that it could be several weeks before Defra would be asked to consider transposing the recommendations into national law, and they were unlikely to take effect until spring 2013.
She said a crucial question was whether material not given end- of-waste status would be able to count as recycled: “If it always remains waste, how can it be recycled? That is something for Defra’s legal department.”