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Glass PRNs soar amid fears of market manipulation

The price of glass remelt Packaging Recovery Notes (PRNs) has reached one of the highest levels in ten years, with industry insiders saying it could increase further to £100 per tonne.

PRNs for glass remelt have risen to £85 per tonne from £76 last week and from £50 at the beginning of the year, according to MRW data.

For the second year in a row, in November and December glass PRN prices have approached £90 per tonne, a price that market commentators describe as three times what would be a fair level.

This year a split target for glass remelt and aggretate has been introduced, but while glass aggregate PRNs have oscillated between £45 and £60 per tonnes, glass remelt PRNs have almost doubled in price since January.

And glass PRN prices for remelt could continue rising, reaching “the triple figure” before the end of the year, according to Tim Gent, director of Recresco, a large glass reprocessor.

Ian Andrews, senior market operator at t2e also told MRW that prices could reach the £100 pounds per tonne, although more likely this would happen in January before the deadline for producers to fulfil their annual obligations.

According to industry insiders, such high prices are the sign of an unhealthy glass PRN market and are caused by a mixture of factors.

First, a miscalculation of the amount of glass put onto the UK market, a figure on which the glass packaging recycling targets and obligations for producers are set. A recent report by Valpak and WRAP suggested that the actual amount of glass circulating in the UK could be as much as 300,000 tonnes lower than was previously thought.

Second, the demand for PRNs has increased in recent weeks as the year is coming to an end. A number of producers waited to enter the market hoping that prices would decrease and now are looking to secure tonnages to fulfil their annual obligations.

Another factor mentioned by some industry insiders is the limited competition in a market dominated by a few large players.

Phil Conran, director at consultancy 360 environmental, said that are concerns in the market about market manipulation. “The relatively small number of glass PRN/PERN issuers provides opportunities for prices to be maintained at a much higher level than a more competitive market,” he said.

Andrews said that market competition has almost halved since 2012, with the number of actual PRN issuers reduced to about ten. This is because a growing number of reprocessors have acquired PRN issuance rights on behalf of the furnace operators as part of commercial agreements.

But, Recresco’s Gent told MRW that it would be not feasible for reprocessors to hold back quantities of materials to keep prices high, as high PRN prices reflect in higher feedstock prices.

“We can’t do that, simply because of the financial pressure that that brings to the company,” he said. “We have to pay so much money for glass now that we cannot afford from a cash flow point of view to do that.”

Instead, he said that the higher prices were resulting from a freeze in export from the UK to Europe as a result of incidents of low-quality glass cullet being sent abroad. This would have led to a decrease in the general PERN/PRN supply and resulted in an increase in prices.

Rebecca Cocking, head of container affairs at British Glass Manufacturers Confederation, told MRW the situation in the glass market was a cause of concern. “High prices are not going to help anyone in the supply chain,” she said, “they don’t result in an increase in the amount of glass that is collected.”

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