Aluminium PRN prices firm up on back of Q2 figures

The prices being paid for aluminium PRNs have edged up following the publication of data suggesting that compliance could be tighter for the material stream this year than originally envisaged.

The figures published on the agency's National Packaging Waste Database last night (July 22) are for the second quarter of 2010 and show that 1,838,870 tonnes of packaging waste were sent for recycling or recovery in the period – slightly up from 1,802,172 tonnes in Q1.

And, while this suggests that businesses are still on track to meet their overall recycling target for the year – as well as most of their material specific ones – they also show there could be a potential shortfall in aluminium for the year if performance does not improve. This is even when taking into account the 3,462 aluminium PRNs carried forward into 2010 from 2009 (see table below).

While the figures are still provisional – with three large aluminium reprocessors and exporters still to submit their data – this has already put upward pressure on aluminium PRN prices.

Gareth Goodall, director of markets at PRN trading platform scrap-ex, told letsrecycle.com today: “The price being paid through scrap-ex for aluminium PRNs was up first thing this morning from £17.50 to £18. The price is stronger on the back of the numbers.”

Thomas Rickerby, senior market operator at The Environment Exchange (t2e), added: “Aluminium has today crept up from £20 to £20.25. At the same time, we have seen plastics fall to £2.50 a tonne from £3 and paper fall to £1.50.”

Export

Mr Rickerby pointed out that, while the business targets for 2010 still looked achievable due to reduced obligations for the year (see letsrecycle.com story), there had nonetheless been a marked fall in the volume of paper, aluminium, steel and plastic packaging exported for recycling.

He said: “The general decline in exports could be attributed to wider instability in the economy and issues in the Eurozone as well as commodity prices coming off in the last six to eight weeks driven by a fall in demand from the Far East.

“Any other year that would impact on PRN price but there was a massive carry over from 2009 and a fall in the obligation. Aluminium is the main one worth keeping an eye on.”

David Adams, managing director of PRN traders Clarity Environmental, suggested that the lower export figures could be in part due to the low prices of PERNs (the PRN export equivalent), which he said could therefore inversely “be helping UK reprocessing”.

Glass

Looking at glass tonnages, Phil Conran, of consultancy 360 Environmental, noted: “Glass has shot up by 76,000 tonnes from Q1 to a record high of 473,000 tonnes. This significantly eases the pressure on glass for the year although it will need continued strong performance to see a safe surplus.”

Mr Adams said this performance could have been influenced by the good weather and World Cup, and that, in the short term, “you may see the price of glass go down on the back of this”.

Obligation

Following the publication of the quarterly figures, all eyes are now on the revised obligation data for 2010 which is due to be published by the Agency on August 10 – with many hoping that obligations may rise and help to lift PRN prices higher.

Mr Rickerby said: “We will see a new release on obligation figures fairly soon and we may see a slight increase which would be good news for sellers.”

Mr Goodall agreed, commenting: “The figures published yesterday are just the supply side and do not reflect demand. We will have that on August 10.”