Prices have leapt from the mid-teens into the mid-thirties and beyond for plastic, steel and aluminium PRNs per tonne this week, with some reprocessors even demanding as much as 40 to 45 a tonne for their notes.
Click here for the latest PRN prices as published by letsrecycle.com.
Although there are major questions over the availability of plastic PRNs this year because of questions concerning suspended reprocessors, the high price of metals PRNs may not have been based purely on their availability, experts believe.
The fact that PRNs can be “carried over” from December 2004 into 2005, the potential “hoarding” of certain types of PRNs by some buyers, speculative buying or poor planning by obligated parties and the presence of fraud could all be taking an affect.
Carry over
Reprocessors are allowed to hold on to their December PRNs and issue them as January 2005 PRNs under the “carry over” system. They have the option to issue these PRNs in either December or January, but if they issue them in January 2005, obligated parties cannot use them towards their 2004 obligations.
This is giving some reprocessors the confidence to hold out for higher prices when compliance schemes or brokers come to them seeking December 2004 notes to meet their 2004 obligations.
In other packaging materials, paper and wood PRNs have crept up towards the 10 a tonne mark, while glass PRN prices have slipped below the 10 a tonne mark, with the general consensus that there are plenty around this year.
Experts in the reprocessing sector have told letsrecycle.com that though the market for metals PRNs will be tighter this year than previous years, there will be enough. Some have suggested that there is likely to be a surplus of several thousand tonnes of steel PRNs, while aluminium reprocessors should also deliver sufficient recycling.
John May, manager of Corus Steel Packaging Recycling, said that Defra's latest reprocessing figures suggested there wouldn't be a shortage. He said: “At the current running rate, and given the carry over from 2003, there should be a surplus.”
Some metals reprocessors told letsrecycle.com that fourth quarter reprocessing of steel packaging has been “fairly quiet” so far, and that “the market could be close this year”. As a result, they have been confident in demanding higher prices for their notes with the prospect of carrying over December PRNs into January 2005.
One steel reprocessor said: “If we don't get high enough prices, we might just hold onto them for next year.”
This situation is being seen for the relatively over-supplied paper and wood PRNs, with reprocessors holding back their notes unless schemes pay over 10 a tonne. Geoff Hill, commercial director at St Regis said this situation had arisen because certain compliance schemes and brokers had been “sitting on their hands” and not buying PRNs until December in the hope the market would collapse – as has happened in previous years.
But Mr Hill said they had not appreciated the importance of the higher material-specific targets this year, and that there would be no collapse in prices this December.
“I don't have that many PRNs that aren't committed through contract arrangements,” he said, “but I have the option to carry forward and therefore I am asking for what I regard as a sensible price.”
Distribution
Other experts have said that the issue for steel and aluminium PRNs is not whether there will be enough issued in 2004, but whether those issued were in the right hands.
Under the packaging regulations, obligated businesses and compliance schemes must reach material-specific recycling targets as well as overall recycling and recovery targets. For the material-specific requirements, they must buy sufficient amounts of each type of material PRN to meet their specific obligations. For the overall recycling target, they can use any type of recycling PRN.
But some analysts are warning that some compliance schemes could have been buying more of the scarcer steel, aluminium – or even plastic – PRNs than they need for their material-specific obligations, using these PRNs towards their overall recycling target.
If this is the case, other obligated parties may find that despite the reprocessing figures suggesting there will be enough PRNs to go around, there would not be enough steel, aluminium or plastic PRNs for their own individual material-specific needs.
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