The old-KLS market has seen the price of recovered packaging material dive because of the plummeting value of the PRN. Some paper PRNs in the past have been sold for as much as 30 each (per tonne) but now the value has fallen to as low as 10. As a consequence, UK mills have cut the prices they pay. Further price cuts could come this month as well as in January.
Earlier this year merchants and mills were in dispute over the fact that many merchants chose to export material because they could receive a comparable price as well as the export-PRN from overseas mills. If there are further price falls, this scenario could become reality again. At present UK merchants are able to achieve about $70 or about 45 on the export market. A PRN added in could generate 10-15 more and so it would be worthwhile exporting the material.
Exports have also always been a safety valve at the turn of the year as UK demand traditionally slackens. With UK mills having low order books and plant downtime seen recently at mills such as those in Purfleet and Snodland, it seems the mills are unlikely will not be too worried in the short-term if more material does go abroad.
But, one merchant remarked that “the situation with the PRN is very worrying. There is considerable support from governments for the collection of packaging grades on the continent but we do not see it here. I believe that the system has been abused in the UK – there should be enough customers for the PRNs.”
Another reflected the government's decision not to increase packaging recovery targets in 2003. The merchant said that the government was to blame for not putting up targets for recycling next year. “It can't make sense for the targets not to be put up by just even 1%.”
Greenfield
The market for office grade material and coloured best pams may see some disruption from the financial difficulties at the Greenfield plant in France. Orders for merchants have come to a halt and some fear losses from non-payment for material that has been despatched.
The plant at Chateau-Thierry near Paris was set up five years ago to recycle paper to produce a high-grade pulp. Some UK merchants have been unable to arrange credit insurance for shipments to the plant for the past two years and so are expected not to be over-exposed as they have been cautious over receiving payment for material sent. However, it is though that a few firms, particularly in South East England may face some financial loss.
Subscribe for free