Some glass traders have had to drop the price of the material by between 7% and 25% following further falls in the packaging recovery note (PRN) prices.
According to experts, glass PRN prices have further decreased since MRW reported on initial drops in price from £20 in Q1 to £14 at the beginning of September. There were concerns that there could be a crash in the glass market.
Glass PRNs are currently trading at £10.50 to £12.50, which has forced glass collectors and reprocessors to drop their prices because buyers are not willing to pay a lot of money when PRNs are so low.
Recresco national sales manager Fraser Macintyre said: “The PRN market hasn’t crashed but it has taken a big dip. This drop in the PRN price has been significant enough for us to have to take some action on glass prices, so we’ve reduced them on average by 7-10%.
“I think things will recover in six months or at the beginning of the next year.”
An industry insider told MRW that he had to decrease the price of glass he was trading at by 25%, dropping it by £20 to £15. In addition, two glass reprocessors he deals with have today (28 September) knocked 17% off their prices.
He commented: “Because the PRN prices have dropped, buyers can’t afford to pay higher prices, so we’ve had to decrease ours. We didn’t see this one coming because glass has been really steady in terms of price for the past eight years.
“For us, it doesn’t make glass as attractive as the other materials we sell at the moment because it is so low. Plans we had to expand collections of glass may now need to be rethought.”
According to PRN trading platform Scrap-Ex director of markets Gareth Goodall, the reason for the further PRN price falls is the supply and demand balance, which suggests there are more PRNs available than there are buyers.
PRN marketplace the Environment Exchange said glass PRNs are trading at £11.50 on the spot market, which is more than 30,000 tonnes oversupplied. Account manager Patricia Hall said: “The situation could recover before the end of the year if the Q3 supply figure is tight. The Government has still to confirm packaging recovery targets for 2011, which has led to a degree of uncertainty regarding next year’s prices.
“In 2010, PRN prices are extremely flat due to a large oversupply and if targets remain the same in 2011, it is anticipated that the situation may not recover.”