Recycled plastics packaging figures have defied expectations to hit record levels, according to provisional data from the Environment Agency (EA).
More than 263,000 tonnes of recovered plastics were accepted by agreed protocols in the last quarter of 2015, 20% higher than the previous record of around 220,000 for a three-month period.
This means the material has comfortably exceeded the 215,000 target, with most growth coming from the export market.
The Environment Exchange senior market operator Tom Rickerby described the figures as “spectacular” under “very challenging trading conditions” within the recovered plastic market, including a falling oil price and slowdown in the Chinese economy.
“We were going into that fourth quarter thinking ‘this is going to be a real challenge’, and packaging recovery note (PRN) prices have remained high as a result of that,” he said.
“With hindsight, you can look back and see that the target of 215,000 that we were going into for Q4 has been comfortably met, and we will see significant volume carried into 2016.”
The Advisory Committee on Packaging (ACP) chair Phil Conran described plastics’ 60,000-tonne increase on the previous quarter as “barely believable”.
He said: “If 2016 continues at this rate, then there should be no problems meeting the target for this year. But there is the risk that Q4 might just be making up for a slow Q3 and that Q1 2016 may fall back again.”
Defra recently ran a consultation on whether to reduce its plastics packaging recycling target to 49% for 2016. It is set to release the results of this on 1 April.
Rickerby (pictured) said it would be a mistake for the department to increase plastics recovery targets as a result of the figures but said they do indicate an ability to comfortably meet potential rises.
“It is not guaranteed and a lot will depend on how the PRN subsidy is affected. We could go back to doing 220,000 tonnes and below relatively easily, but buyers will look at these figures and feel much more confident about 2016 compliance,” he said.
Buyers have already begun reducing their price expectations in plastic, he said, including spot prices dropping from £46.50 to £45.50.
“I suspect prices will continue to fall or there will be a correction in PRN prices,” he said.
Paper also recorded a 15% increase on its previous best quarter while steel performed better than expected.
Defra and the EA recently agreed to almost double the mixed paper PRN protocol, according to the ACP.
The first ever monthly PRN report was also released by the EA, after the regulator agreed to an ACP initiative to increase the frequency of reports to improve transparency.
While there is no legal requirement for UK agencies to publish data more regularly, they have supported the proposal and agreed to trial the initiative.
But Rickerby said that until the reporting of monthly data is mandatory, he was cautious about any sort of market judgments that are made based on those figures.
He said: “Our concern is about how markets and prices react to data, and I think that kind of monthly data is incredibly misleading so it’s of questionable value.”
- Rickerby will be expanding on his analysis in the 27 February issue of MRW