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Regulator urged to tackle PRN market abuse

Aluminium packaging 2015

The Advisory Committee on Packaging (ACP) has urged regulators to act against abuses of the aluminium packging recovery note (PRN) market.

ACP chairman Phil Conran said it had asked the Competition & Markets Authority to intervene after because PRN/PERN prices were far higher than they should be given the industry’s recycling rate.

Conran said in the first three quarters of 2018 there were 76,500 tonnes of aluminium recycled against a target for the year of 94,500 tonnes.

“A significant year end surplus looks likely,” he said. “Normally in such a situation, PRN prices would be reduced by market pressure.

“However, where a small number of accredited exporters and reprocessors are responsible for significant volumes of recycling and they withhold PRNs from the market, this can distort the market leading to unnecessary price escalation.”

Conran said the ACP was “deeply concerned” that this undermined the integrity of the system with producers forced to pay unreasonable costs to avoid noncompliance, “without any clear additional environmental outcome”.

The ACP called on the CMA to act after finding the UK environmental agencies were powerless to force accredited operators to place the PRN/PERNs onto the market.

Rick Hindley, executive director of Alupro said: “Alupro suspects there is something going on in the PRN market which should not be going on. Typically the price has reached £100 per tonne.

“The EA says there are enough PRNs to meet the target but they have not been issued. It looks as if reprocessors and exporters are holding them hoping they increase in value. That is not illegal but it is against the sprit of the system.”

Hindley said Alupro suspected one company, which he would not name, was involved in this practice in an attempt to drive up prices, but so were others yet to be identified and these held sufficient volumes of PRNs to leave few other sources.

“Only the environment agencies have visibility over this,” he said.

“A similar situation happened last year and if this is not resolved now it could get worse and threaten the PRN system, and even if that s going to be reformed that will still take some years.”

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