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Markets need room to work properly

There seems to be a lot going on at present in the plastics recycling industry: market fluctuations, financial woes, calls for “standards” and the dreaded Packaging Recovery Note (PRN) debate.

There is more stability after the oil price crash which caused ripples (more like waves) in most sectors of the plastics arena. The transfer between usage of recycled material to prime and back to recycled continues, and the ‘grass is greener’ has meant some colds have been caught.

Surely, a sustainable pull-through model must be the best way to encourage and promote recycling rather than artificial intervention-based methods, which only seem to work for a limited time before they cause issues that were never intended or anticipated. Markets will be markets.

High-profile business model failures are sad and concerning, though it is not just the ‘sexy’ end of the industry that has had issues – the whole chain has been heavily challenged.

What is of concern, though, is the apparent disconnect with what we do and how we operate. We live and do business in a commodity-based cyclical industry, so managing margins is key. A business that operates with either its sourcing or sales function seeming to be ‘fixed’ must lead to issues along this cyclical road.

Also a worry is the fact that collectors of recyclate say strong and fixed high selling prices are essential for sustained recovery – I am not sure I follow this theory. End markets will find their level and everything else cascades back.

Plastics processors

Ultimately, we have a ‘polluter pays’ principle. Therefore if the producer of waste is lucky enough to ‘profit’ by selling recyclate at good prices at points in this cycle, then great. But if global markets are down and they have to pay for their waste to be removed, that must be right.

Long-term fixed buying price contracts also concern me. Those involved, depending on the point in the cycle or the side of the fence they sit, either feel wise and elated or foolish and hard done by. Only at a very small point in time do they appear ‘fair’. Instead, market floating contracts are right and equitable. A company needs to provide a good, reliable service – and let the markets be markets.

Standards on quality definitions are high on people’s agendas. I wonder how many national newspapers would carry a story involving someone being accused or found guilty of a crime and every single police officer in the land interpreting or enforcing it differently.

Setting rules and working to them in society is the norm, so why, as far as exports and cross-border trading are concerned, can we not have these agreed, published and communicated in a sensible, fair and consistent way?

They also need to be practical, both to achieve and enforce. The vast majority of exports – without which our recovery rate would plummet – are not pre-consumer production but post-consumer, and post-consumer needs to grow if we are to meet future targets.

Lastly, PRNs. Everyone wants a level playing field. I agree, but many seem to want an extremely slanted level playing field! We have lost sight of what PRNs were, and I believe still are, meant to achieve.

They were meant to help, encourage and promote collections in certain points of the commodity-based cyclical industry changes, not specifically reprocessing. Let’s not forget this principle.    

Chris Collier is commercial director of CK Group

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