The aim of the futures market is to allow businesses or schemes obligated under the packaging regulations to secure their 2005 PRNs and gain certainty going forward to next year.
The Environment Exchange's managing director, Angus Macpherson, explained: “This gives all those concerned about the volatility of the PRN market the ability to budget exactly today either their income or cost of compliance for next year.”
Prices for PRNs on offer in the 2005 market are significantly above those being bid for the notes, but Mr Macpherson told letsrecycle.com this was inevitably going to happen.
“It will inevitably happen – there will be a widespread between the sellers and the buyers, but they will come to some compromise. But it's a real opportunity for traders to close out the contract for next year.”
Prices
Offers on the 2005 market at the time of writing are 40 for aluminium, 25 for steel, 20 for paper, 20 for plastic, 20 for wood and 5 for recovery PRNs.
Bids are currently 30 for aluminium, 17.50 for steel, 15 for plastic, 15 for wood and 1 for recovery.
The Environment Exchange saw almost 4,000 tonnes worth of PRNs sold in its April 2004 forward market, 25,922.50 going to delivery. And, open (traded) contracts are awaiting settlement for 3,000 tonnes in the July forward and 6,500 tonnes in the October forward markets.
However, the company said that there has been no trading in the January Forward market yet, where PRNs can be traded in the carry-over, and counted for either 2004 or 2005 obligations.
Subscribe for free