Novelis, the company that was formerly known as Alcan Aluminium Can Recycling, questioned the need for aluminium PRNs to be traded at the current prices – and cast doubt on whether PRN revenue was being invested in expanding UK reprocessing capability.
While purchases of aluminium PRNs by obligated packaging producers through long-term contracted relationships with reprocessors have been at about the 50 to 70 per tonne level this year, trades on the open market have reached higher than 200 per tonne in some cases.
” There are exporters and reprocessors who are holding on to PRNs and playing the market – which forces prices higher.“
– Rick Hindley, Novelis
Rick Hindley, national manager of Novelis, said this week that he was “quite convinced that people are holding onto their PRNs” to force up the prices.
He said: “We are very concerned about the aluminium PRN prices traded at 200 per tonne. My view is a significant proportion of aluminium PRNs are supplied through contract at significantly lower prices. But, the PRN market is supply and demand. There are exporters and reprocessors who are holding on to PRNs and playing the market – which forces prices higher.”
Mr Hindley also expressed his concerns over how PRN revenue is being spent by reprocessors. He said: “I would challenge how that money is being spent. We don't need price support for aluminium – it is already a very valuable metal, we don't need to spend PRN money that way. It must go into collections.”
Figures
The reason that reprocessors and exporters have been able to get such high prices for aluminium PRNs is that interpretation of current data suggests a shortfall could arise this year for the amount of aluminium PRNs available to producers to meet their obligations.
But, Mr Hindley said he believed the low reprocessing figures for the first quarter of this year masked a significant upturn in reprocessing in the second and third quarters and the remainder of 2005. He said the 19% increase seen in the second quarter meant reprocessing in the first half of 2005 was 9% above last year's performance – and the growth in reprocessing looks set to continue for the remainder of 2005, Mr Hindley said.
“Novelis issues over half of all aluminium PRNs,” he said, “and I can tell you this year we're 30% above where we were last year.”
Mr Hindley insisted that Novelis had not been sitting on their PRNs, that most were sold through contracts, while the remainder were sold through the year “at a much lower price than 200 per tonne”.
Surprise
Furthermore, he warned those that are sitting on their PRNs hoping for higher prices that the end of the year could see a price collapse if reprocessing levels do meet with demand. He said: “Reprocessors could end up with a very nasty surprise if they are sitting on PRNs having stated their value at 150 per tonne, but not realising that value.”
| Related links: |
Ultimately, the Novelis national manager said the UK should meet the 2008 EU Directive target for recycling “and all the targets along the way”, although it would not be easy. Mr Hindley said there was no shortage of markets for aluminium packaging waste – the Novelis plant in Warrington is being expanded to 120,000 tonne-capacity over the next few months, which will mean it could theoretically take every single used can in the UK with space to spare.
Collections
The key issue in driving up reprocessing rates was the need for collections from the household waste stream, he said, as was found by the Pack Flow report of which Novelis was a contributor (see letsrecycle.com story).
Mr Hindley said: “Looking at the Pack Flow data, I will stick my neck out now and say aluminium will meet its targets in 2008 and along the way. It's not going to be easy, but we have as realistic a chance as anybody.”
Subscribe for free