PRN prices stay low as figures confirm oversupply

The data, for the third quarter of 2010, shows the amount of packaging waste accepted by reprocessors and exported for recycling or recovery grew to 1,909,326 tonnes between July and September.

Taking into account the carry over from 2009, this represents a continuing improvement in performance and means that only 780,000 tonnes will have to be recovered in the last quarter to ensure that business targets for 2010 are met (see table below).

The figures, published on Friday (October 22) on the Agency's National Packaging Waste Database, also show that the material-specific targets for wood and paper have already been met – with steel and plastics targets also within easy reach.

Even the targets for aluminium and glass – which had at one point looked tight – look comfortable, with aluminium figures surging in Q3 in particular.

Prices

While the figures show an encouraging improvement in recycling rates and represent considerable improvement since recycling levels tumbled at the beginning of the recession, they are also likely to put further downward pressure on PRN prices, which are already on the floor. This in turn will frustrate reprocessors and mean less investment in recycling.

Edward Cooke, director of compliance scheme Compliance Link, told letsrecycle.com that while the performance was “brilliant”, he even suspected the figures could be too good to be true. He said: “It would comfort me if the Environment Agency was checking harder that all the reprocessing and exporting was genuine”.

Mr Cooke added that the data showed that, when setting the targets, the Department for Environment, Food and Rural Affairs had not forecast accurately the amount of packaging that would be placed on the market – meaning that they were out of kilter with what was happening on the ground.

Thomas Rickerby, senior market operator for the Environment Exchange PRN trading platform, said that the figures “confirmed that the market had been showing for the last few months – a massive oversupply”.

He added that there was nothing too shocking but that glass PRN prices had already fallen on the back of the figures and were now trading at around £7 a tonne. This is compared to around £17-19 a tonne in August.

Looking at the wider picture, Mr Rickerby said it was the targets for 2011 and beyond which was the real focus.

He said: “From our point of view PRN prices have reflected this for most of the year. Everyone is now waiting for the announcement about the targets for next year. Hopefully we will see some improved targets to counteract the oversupply of PRNs we are seeing.”

Material stream	Carry over from '09 (t)	Packaging recycling and recovery in 2010 (t)				2010 Targets (t) – as of Oct 25	2010 Target (%)
		Q1	Q2	Q3	Tonnage still needed for 2010
Paper	211,704	763,704	741,767	803,803	-33,594	2,487,384	69.5
Glass	63,657	396,720	472,917	472,795	291,253	1,697,342	81
Aluminium	3,462	13,927	13,807	15,997	11,769	58,962	40
Steel	24,027	116,151	92,271	96,504	12,676	341,629	69
Plastic	35,229	160,975	147,314	153,644	45,856	543,018	29
Wood	41,174	197,464	202,047	183,604	-421,005	203,284	22
Recycling	379,253	1,648,941	1,670,123	1,726,347	879,166	6,303,830	68
Overall Recovery (inc. recycling)	417,161	1,806,392	1,856,483	1,909,326	780,499	6,769,811	74
Source: letsrecycle.com analysis of figures on National Packaging Waste Database