The Plastic PRN has a history of price volatility but after two relatively stable years of low values, 2012 looks set to return to less predictable pricing trends. Few traders would have forecast this year’s rapid price increase from £5 to over £20 following the release of disappointing Q1 recycling data indicating a quarterly supply deficit of 16%. Since the release of that data the plastic PRN trading on t2e has spiked at £20 per tonne, retraced to £16, bounced back to £21 and has finally settled at the current price of £19. You’d have to cast your mind back nearly three years to June 2009 to register the last time plastic PRNs traded at over £20.
The unexpected nature of this fourfold price increase has resulted in many buyers having to tear up their 2012 compliance budgets and reassess their purchasing plans. The increased volatility has also seen a shift in trading patterns with very few PRN being offered in the forward markets beyond July delivery and the majority of trading taking place on the Spot market. The volume of plastic PRNs traded on t2e in the period April to June has also seen a 49% increase on the same period last year.
Buyers will hope a higher PRN price should create a stimulus for increased supply and a stabilisation of the market but many sellers remain bullish, reporting little improvement to the difficult trading conditions that have disrupted the generation of PRNs already this year. The Q2 recycling figures due to be released in July should clarify this position. However with challenging target increases for 2013 and beyond creating additional market uncertainty, expect plastic PRNs and price volatility to be reacquainted for some time to come.
- The Environment Exchange is the marketplace provider for PRNs, WENs and recovered paper (OCC and ONP). Visit www.t2e.co.uk
Tom Rickerby, senior market operator, The Environment Exchange (t2e)