The Packaging Recovery Note (PRN) market looks set for a less volatile year as initial supply and demand figures suggest a more comfortable time for buyers.
Figures published by the Environment Agency (EA) show the amount of packaging material put onto market and give an indication of how many PRNs/PERNs producers will have to buy to meet their recycling responsibilities.
Total obligation for 2014 is 6,882,778 tonnes based on the most recent figures as MRW went to press, not much changed from last year’s 6,872,183 tonnes.
Across the various packaging categories, obligation has risen for aluminium, plastic and wood and fallen for paper, glass and steel.
This year, glass has seen a drop in demand of around 141,000 tonnes as the impact of a reduction in the target from 81% last year to 75% this year kicks in.
More glass was recycled in the first quarter of 2014, compared with the same period last year, with glass remelt seeing a surplus of around 12,000 tonnes on quarterly obligations (annual obligations divided by the four quarters).
Remelt glass now makes up 65% of the target compared to 35% for aggregate glass, and change from the 63%/37% split last year.
Plastics quarterly obligation of 192,699 tonnes is up from last year’s 174,801 tonnes. That quarterly figure has been surpassed with 201,040 tonnes of waste processed in the first quarter of 2014, creating some downward pressure on prices.
Aluminium has seen a 3% increase in its recycling target and has seen a rise in obligation as a result.
While there is no significant change in steel demand with a 1% increase in recycling target, the 78,912 tonnes processed in the first quarter is under a 85,283 quarterly obligation, confirming earlier indications that steel could be the most challenging PRN market this year.
Ian Andrews, senior market operator at t2e, said: “In previous years there has been some concern about supply and some panic. These figures don’t create any really great concerns or shockers for market. They point towards a more comfortable year for buyers than sellers. This year looks like the turning point which flips to being a buyers’ market.”
However, he warned that buyers tempted to wait until later in the year in the hope of better prices could be taking risks.
“Buyers might look at the figures and say it looks like a relatively easy year and put off buying,” he said. “But they need to be careful about feeling comfortable and trying to get the market down. If they don’t support the market there’s a tipping point where this will start to affect supply and push prices up.”
See the document on the right for a breakdown of the figures, supplied by t2e.
- Defra is set to announce changes to the rules on how PRNs are issued to “level the playing field” between domestic reprocessing and exports.The measures are designed to help address the ‘imbalance’ between PRNs and Packaging Recovery Export Notes (PERNs). UK reprocessors have argued that the current system incentivises sending waste materials abroad because exporters can claim PERN credits on 100% of the tonnage they export while PRNs are subject to reductions due to contamination of material.