A few months ago, we were wondering how high the glass price could go - now, like all peaks, we are wondering how far it can drop.
The consequences of a falling market are far more distressing than one that is rising: I hope that Ferrari was only rented because it is time to send it back.
The source of all the good news on price last year, the value of the packaging recovery note (PRN), is now in decline and the aggregate PRN even more so. There appears to be no real justification for this other than a lack of buying demand this early in the year.
This state of the market is fine if the only objective is a cheaper PRN. But if obligated companies are interested in complying this year, then it is not a good start.
It will be very difficult to meet targets for glass this year, and we need to start early to fix the problem or we will run out of time. A 40% drop in value sends the wrong message to companies on the front line that are actually recovering glass from the waste stream.
It has also resulted in viable markets for aggregate being shut off which, combined with serious accreditation problems on the export of unprocessed cullet, will probably result in an alarmingly low first-quarter glass figure.
The only legitimate way to bring down compliance cost is to meet or exceed the target. Artificially driving the PRN price up or down should not be an option and, in any case, the results are counter- productive.
Recovering sufficient glass this year to meet the UK’s European-set target is not guaranteed. We will need every tonne we can get, and every penny we can generate helps to do this.
Most of the PRN cash goes down the line to suppliers in price support. This is fair and inevitable in a competitive market environment, but at this point there is no longer any accountability or obligation into how the money is spent.
We hope that a higher PRN price will encourage increased investment and higher recovery. Undoubtedly it does, to a degree, but by how much we will find out in due course.
Once all the UK’s stockpiles of glass are used up and we have to rely completely on new glass to meet targets, we may have to look at the method of collecting that gives highest yield rather than the best quality.
If that system is commingled kerbside combined with alternate week collections, then it will have to be adopted by the majority to avoid failing to comply with our legal obligations, however unpopular the method may be.
The UK does not have sufficient reprocessing capacity for the volume of this type of material that would be produced, but it can be done quite easily.
Surely it is a better problem to have too much poor-quality material, and having to put PRN money into improved plants, than not having enough glass to reach the target and carrying on with a high PRN price and paying a daily fine to Brussels?
Tim Gent, Director, Recresco
February trading report
Glass traded in good quantities this month.
But trading was sporadic, with many buyers unwilling to firm prices so early in the year.
Traditional early buyers where shocked at the level of the offer prices in the market because they had managed to secure tonnage in single figures for the same period 12 months earlier.
Although informed of the issues that hit the market last year, they were still unwilling to commit and decided to put off purchasing until later in the year.
Good selling volumes continued to be offered in aggregate and remelt glass markets throughout the month, but with buyers unwilling to commit to sellers’ price aspirations, trading opportunities were limited.
The volumes traded were secured by a small number of buyers and should not be taken as evidence of an active market.
Information supplied by t2e
|Year-to-date average price||Year-to-date traded|
|April 2013 (Aggregate)||£40||2,000|
|April 2013 (Remelt)||£52.20||2,000|
|July 2013 (Aggregate)||£40||5,000|
|July 2013 (Remelt)||£50||10,000|