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PRN system may act as a needed stimulus

The latest round of quarterly recycling data was some of the most eagerly anticipated in recent years with PRN prices in several materials potentially hinging on the figures’ relative strength or weakness (see page 4). Anecdotal reports of a slowdown in recovery and recycling rates have been consistent over the quarter. These concerns were backed up by the data.

What is clear now is that the global economic slump is now taking a firm grip on recycling markets. Glass and plastic remain undersupplied for the year sparking a rush to buy both PRN materials: glass soared by nearly 90% this week. Steel availability has also been dragged into dangerous undersupply territory.

But what does this round of weak recycling data mean for the PRN market beyond the immediate knee jerk price increases? Firstly don’t rule out further price increases as buyers scramble to meet compliance and reduce their exposure in the problem materials.

Questions are likely to be raised over how much and for how long has the alleged over-issuing of glass PRNs distorted previous years’ data. Do current levels reflect a more accurate picture of glass recycling rates in the UK? And how will next year’s challenging 5% target increase in plastic be achieved if we are already struggling to meet this year’s demand?

What we do know is that the PRN system is designed to stimulate and subsidise underperforming recycling markets. After two years of rock bottom PRN prices, and many beginning to question its worth, 2012 could be its chance to shine again.

Thomas Rickerby, t2e Senior Market Operator

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