5 July 2016 by Tom Goulding

‘Business as usual’ for PRNs as experts urge calm

Trading of packaging recovery notes (PRNs) has not been destabilised by the UK’s decision to leave the EU, although some longer-term impacts should be anticipated.

This was the message from compliance schemes and waste packaging experts this week, who continue to call for stability in the wake of fallout from the EU referendum result.

Top down: Phil Conran, chair of the ACP, Duncan Simpson, Valpak director of sales & marketing, and Robbie Staniforth, ecosurety commercial manager

Top down: Phil Conran, chair of the ACP, Duncan Simpson, Valpak director of sales & marketing, and Robbie Staniforth, ecosurety commercial manager

They add that the vote is unlikely to have an immediate effect on UK waste packaging legislation – despite uncertainty now surrounding the draft Circular Economy recycling targets.

News that the UK had voted to leave the EU sent shockwaves through the waste industry late last month, stoking fears that environmental policy would be consigned to the bottom of the government’s in-tray.

And, there was initially some concern for commodity markets – after pound sterling immediately hit a 30-year low in the aftermath of the vote.

Sterling

According to PRN traders, short-term effects on the packaging recycling market have not yet been felt. Andrew Letham, sales and marketing manager at The Environment Exchange, argued that the weaker pound could even benefit exporters when paid in dollars and euros – but it is to be anticipated that foreign buyers will quickly realign their prices.

He added: “If all regulations and trade deals remain in place, expectations are that exports of secondary raw materials from the UK could increase due to the drop in the value of the pound. This in turn would lead to an increased supply of PERNs but could potentially hamper the ability of UK reprocessors to compete on price for feedstock and therefore a downturn in UK reprocessed material (PRNs).”

Robbie Staniforth, commercial manager at Bristol-based compliance scheme ecosurety, told letsrecycle.com that it was still “too early” to tell how the PRN market would react – but he believed that the falling pound could have an impact going into the second quarter of 2016.

‘Influx’

He said: “What we might find is people have traded the secondary materials because they are not sure which way the market will go. If that is the case then we might see a bit of an influx of PRNs in the marketplace. Or it might be exactly the opposite. It might be people have held off, we simply don’t know where the market is going to go.”

Duncan Simpson, marketing director at Valpak, suggested that the impact would be “hard to predict”. He said: “It can be a case of swings and roundabouts with some factors assisting UK trade and others possibly impacting in a negative way. We have always taken a prudent risk based approach to managing market uncertainty and will continue to work hard with stakeholders.”

However, Phil Conran, chair of the Advisory Committee on Packaging (ACP), argued that people had been “talking the economy down” in the wake of the referendum result, when the reality could be far less severe.

Legislation

Future packaging recycling targets had been set out for the UK by the European Commission

Future packaging recycling targets had been set out for the UK by the European Commission

Commenting on the future of the UK’s packaging waste legislation, Mr Conran added: “It is business as usual for environmental law until we leave [the EU]. We could argue nothing changes but it’s hard to see our voice on the Circular Economy being taken very seriously.”

Under proposals adopted by the European Commission, EU Member States could have to implement staggered packaging recycling targets of 65% by 2025 and 75% by 2030 (see letsrecycle.com story). But last week, letsrecycle.com learnt that the UK’s position on Circular Economy targets will remain unclear until after the appointment of a new Prime Minister in September.

“I suspect the personalities in the future UK government cabinet will have an effect on how this develops, but there’s no reason why an ambitious, environmentally-minded minister might not see this as an opportunity”, Mr Conran added.

Flow

Mr Simpson added that Valpak’s work on material flow projects could prove valuable for the UK in a ‘post-Brexit’ landscape.

“The report findings will help officials and others understand current performance as well as any learning from elsewhere in terms of benefits or problems,” he said. “It will allow for whatever systems may be in place pre or post Brexit to be designed in such a way as to be fair, effective and efficient in their design and to ensure that UK business can deliver better environmental performance in a way which is also commercially sound for business.”


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