The continuing slide in PRN prices has resulted from a string of factors including the unexpectedly high amount of recycling reported by the Environment Agency in the first half of 2002 and the High Court ruling on brewers' obligations.
The latest guide prices compiled from a survey by letsrecycle.com show PRNs in most materials falling away from the 'psychological threshold' of 30 a tonne. There have been some reprocessors in steel and plastic settling for prices as low as 22 and 23 a tonne for their PRNs out of fears that they will not be able to sell them at all.
The announcement by Michael Meacher last month that overall packaging waste recovery targets would be held at 59% for 2003 has also shaken the stability of this year's PRN prices. Mr Meacher reasoned that he was allowing industry some breathing space in 2003, since the European Commission hadn't decided on amendments to its packaging targets (see letsrecycle.com story)
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However, this decision has been widely criticised by those in the industry for undermining the UK's ability to increase its recycling capacity to meet higher targets in 2004 and beyond.
“Meacher put out the excuse that we don't know what European targets are going to be,” one trader told letsrecycle.com, “but that was unparalleled stupidity. We might not know what the targets will be, but we know they'll be higher. No, the real reason he kept the targets the same was because he got so much flak over announcing this year's target so late earlier this year.”
He explained: “This year he wanted to avoid that, and so he announced it early this autumn. If he changed it, though, he'd; have to go to the Scottish Parliament, the Welsh Assembly and Parliament to get it through – an awful lot of red tape – and it probably wouldn't be until March next year that he would be able to announce the targets. That's the true reason.”
Brewers' ruling
The ruling by the High Court last summer, which said that brewers should no longer be obligated as the 'seller' under UK packaging waste regulations (see letsrecycle.com story)
, has also taken a toll on PRN demand.
Despite assurances from Valpak that the supply of glass from pubs and clubs will not be affected in any major way, compliance schemes have reported significant drops in their customers' obligation as a result of the case. One compliance scheme has said that it has seen a 5% drop in its customers' overall obligation this year.
“This may not seem much on an annual scale, but it's all pushed into the fourth quarter of the year, so it'll have a huge knock-on effect on reprocessors,” the compliance scheme official said.
Although a lot of reprocessors are secure in contracts already agreed with compliance schemes for their PRNs, a lot of sellers are now unable to offload their suppliers, and some unwilling buyers are reporting that there are a number of 'secondary dealers' who have been caught “with egg on their faces”.
One trader reported that there were reprocessors being offered prices as low as 15 – 20 a tonne for some of their PRNs, though they weren't taking such a poor deal despite fears of the PRN oversupply.
But though prices have taken a beating, experts say that they are unlikely to drop too much more.
“Prices have come off the boil,” said one analyst. “My feeling is they are going to end the year even a bit lower, but I don't think they are going to go into freefall.”
It is thought that prices could come down by a further 10 – 15% in 2003.
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