Positive performance across waste packaging materials reported for the second quarter of the year is likely to cause a decline in PRN prices, experts have said.
The latest figures from the Environment Agency indicated most materials are ahead of their half-year obligations, easing concerns about the markets that had been considered problematic, namely glass, plastics and steel.
The data showed “overwhelming improvement” on the figures for the first quarter of the year, said Chris Taylor, PRN trader at Clarity Environmental.
“With glass now at 52.5% of [its] target, plastic at 59.5% and steel at 55.6%, we can now expect to see lower prices through these PRN markets,” he said.
“It is difficult to say how far prices will fall but with buyers’ expectations of strong performance, we have already seen a downturn in large trades of glass and plastic in recent weeks as buyers waited for the data,” he added.
Over 233,500 tonnes of plastics were processed in the second quarter, up 16% in comparison to the first three months of the year.
“The plastics volumes that have been reported in the second quarter are massive,” said Ian Andrews, PRN trader at t2e. “The surplus tonnage that has now been created makes it a lot easier to reach the target this year.”
However, he added that the fall in PRN prices that it is likely to follow such strong performance could be a cause for concern.
“The reason for the increased supply it is that dirty-mix plastics has been mobilised following higher PRN prices in the first quarter,” he said. “So if the PRN price weakens, the value of the material weakens. Dirty-mix plastics could stop moving and get stored in yards, taking a lot of supply away from the market.”
Glass aggregate also registered a large increase, up almost 50% in comparison to the first quarter. But this was not the result of higher PRN prices, noted Andrews.
“The glass PRN prices have remained low of because of a lack of demand. Buyers have decided not to panic despite a shortage of glass aggregate PRNs. A very strong supply has been posted in the second quarter, indicating that softening prices have had little impact on the quantity of material reprocessed.”
But he warned that if the price fell even further, glass aggregate could stop moving.
“The question is how close the market is to the ‘tipping point’? I believe we are very close,” he said.
Another material that saw a large increase in reprocessed volumes was steel. Andrews said this was because a large domestic reprocessor did not get accredited until the end of February, which created a shortage of supply and put pressure on the market in the first quarter.
“The company is now accredited, and that corrected the position of steel,” said Andrews.