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Markets - Packaging

The reprocessing and exporting figures released on 22 April gave the PRN supply position for the first quarter of this compliance year and an indication of what might be in store in the year ahead.

When comparing the latest quarter with Q1 2013, PRN production overall is down 94,437 tonnes, nearly 6%. Materials which have seen a growth in reported supply are glass other (4.57%), glass remelt (7.91%) and plastic (27.93%). Those which have contracted are paper (-2.29%), aluminium (-6.33%), steel (-27.28%), wood (-6.49%) and recovery (-49.66%).

TABLE

MaterialQ1 2013Q1 2014 2013 vs 2014 %
Paper835,445816,352 -2.29%
Glass Other102,045106,710 4.57%
Glass Remelt234,726253,300 7.91%
Aluminium17,23916,147 -6.33%
Steel108,47478,884 -27.28%
Plastic157,146201,040 27.93%
Wood111,827104,570 -6.49%
Efw210,488105,950 -49.66%

Paper

Paper is showing a slight tightness in supply with the reported supply figure down around 19,093 tonnes (nearly 3%) when comparing Q1 2014 with Q1 2013.  The last time paper supply was at a level lower than Q1 2014 was in Q2 2012 which showed a supply figure of 799,230 tonnes. If we take the obligation figure for 2013 and apply it to Q1 2014, then we see paper would have still met its target by 143,548 tonnes.

Glass Other

The reported glass other supply figure was up by 4,665 tonnes (4%) in Q1 2014 compared with Q1 2013. However, the 106,710 tonnes reported in Q1 2014 was lower than the tonnage reported in Q2, Q3 and Q4 2013, by 28%, 29% and 38% respectively. If we take the obligation figure for 2013 and apply it to Q1 2014 (adjusted to the lower target figure of 75%), we would see glass other still down by 25,652 tonnes.

Glass Remelt

The reported remelt supply figure of Q1 2014 was 253,300 tonnes and in comparison to Q1 2013, this was an increase of 18,574 tonnes (8%). As remelt is the preferential note to glass other, its surplus volume can be used to make up any shortfall that other may have in making up the overall glass demand. Despite this strong figure for Q1 2014, it was lower than the tonnage reported in Q2, Q3 and Q4 2013, by 3%, 5% and 16% respectively. If we take the obligation figure for 2013 and apply it to Q1 2014 (adjusted to the lower target figure of 75%) we would see remelt up by 6,158 tonnes. This suggests that glass is available and the supply increases as prices do.

Aluminium

Supply of aluminium in Q1 2014 is down nearly 7% (1,092 tonnes) on the supply figure recorded in Q1 2013, but the low value being paid for PRNs in this first quarter has done little to incentivise supply. It is thought that where there is a drop in export volume, a low reported supply figure is recorded. For example, the reprocessing figure in Q1 2014 was 12,374 tonnes, 2,326 tonnes more than what was reprocessed in Q1 2013 and the exporting figure in Q1 2014 was 3,774 tonnes, 3,417 tonnes less than what was exported in Q1 2013. Additionally, the lower than expected supply figure recorded in Q4 2013 (down 15% when compared with Q1 2014) was 13,981 tonnes. Of that figure, 10,508 tonnes was reprocessed and 3,626 tonnes was exported.

Steel

The steel market has proved to be quite challenging this quarter, largely attributed to a downturn in domestic supply along with reported falling export values which has curtailed selling opportunities in the export market. Steel supply in Q1 2014 was down 29,590 tonnes (nearly 28%) when compared to Q1 2013 and export volume is down 18,616 in Q1 2014 compared with exports in Q1 2013. This drop has contributed significantly to the lower Q1 2014 supply figure.

Plastic

Plastic benefitted from a strong supply figure in Q1 2014. The reported Q1 figure was 201,040 tonnes, up by 43,894 (28%) compared to Q1 2013. Moreover, the Q1 2014 figure was higher than any quarter in 2013. As there is an increased material specific recycling target this year (up from 37% to 42%) it is thought a supply figure, such as that reported in Q1 2014, is what will be required each quarter this year to meet demand. If we take the obligation figure for 2013 and apply it to Q1 2014, we would see that plastic would have met its target by 2,451 tonnes.

Wood

Supply of wood in Q1 2014 was, down nearly 7% (7,257 tonnes) compared to Q1 2013. Additionally, the Q1 2014 figure was also lower than the supply figure from Q1, Q2 and Q3 reported in 2013. Increased demand for biomass is thought to be leading to a reduced volume of wood availability in the market for PRNs.

Recovery

The number of reprocessors getting accredited this year has fallen which has resulted in a downturn in recovery supply of nearly 50% (104,538 tonnes) compared to the reported Q1 2013 figure. It is thought that the low value of the recovery PRN has provided a disincentive for these reprocessors in getting accredited.

Ian Andrews, Senior Market Operator, The Environment Exchange

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