Mills are voicing concern that some independent exporters of old KLS (cardboard) may not be able to fully show an audit trail for the export PRNs they get from abroad. In contrast, independent merchants say that mills have failed to pay enough for old KLS in the domestic market and are also not passing on enough of the PRN value.
Also of concern is claims that some mills may be using PRN monies towards collection work which ends up competing with existing merchant businesses.
The PRN issue centres on the fact that inside the UK, only accredited reprocessors (usually the paper mill) can issue PRNs which currently have a value of about 20-25. But, when a merchant exports material, after gaining Environment Agency approval, the exporter can obtain an export PRN from the overseas mill to which the old KLS has been sent.
One merchant in the South East said: “Some mills are now finding they are short of old KLS but they have not given out a fair share of the PRN income. So by exporting, what is good for the goose is good for the gander.”
A mill source said that he hoped the Environment Agency was making sure that it could trace back the export PRNs if necessary.
On the pricing front the UK price for old KLS currently stands at about 35 ex works. Smurfit had been paying 10 less than the typical market price but has recently fallen into line. It had attracted attention from some critics who felt that as PRNs could be worth 25, it was effectively getting old KLS for free.
Now, there is some speculation that prices could rise within the next six weeks. Demand is strong on the Continent, partly because of exports to the Far East, and a rise in the price for old KLS could surface first in Germany.
Some UK mills are thought to be low on stocks which could force them to raise their buying price, especially as exports still continue to suck large volumes of old KLS out of the UK as export prices are 25+ with a PRN available as well.
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