There is a belief among some reprocessors that there could be a shortfall of as much as 400,000 PRNs next year because of the higher targets set for 2004, including a requirement for packaging recovery to be met by a 94% recycling rate (see letsrecycle.com story).
Much depends on whether or not the obligated tonnage of packaging under the regulations is the figure expected by government for 2004. DEFRA has based the new targets on the assumption that the amount of obligated packaging reported will continue to increase next year, from this year's 8.2 million tonnes to 8.6 million tonnes next year.
Some compliance schemes believe the obligated tonnage could turn out to be lower than the DEFRA prediction, which would mean a smaller increase in the need for PRNs ( (see letsrecycle.com story). However, some compliance schemes have expressed doubts in this opinion and have revealed concerns that they could find it difficult to purchase all the PRNs they need in 2004.
And if the DEFRA figures are correct, letsrecycle.com was told by one major reprocessor that there would definitely be a shortage.
The reprocessor said: “We see several reasons for a reduction in the amount of PRNs available next year. First, the number available from Energy from Waste – or recovery – has been reduced by half and could be around 220,000 tonnes. Secondly, the number of wood PRNs will tumble next year by about 210,000 tonnes because of tougher regulation of the sector. And, the waste paper market will lose the PRNs generated at the Purfleet mill, which is closing. There have also been some closures in the plastics sector and more attention is being paid to it by the Environment Agency.
“Add in an increased obligation and we believe there will definitely be a move from a surplus this year to a deficit,” he warned.
The question of how to get more packaging material out of the domestic waste stream, when local authorities currently have no specific targets for separate packaging collection, is likely to become increasingly important as the UK moves towards its 2008 European targets under the packaging directive.
December PRNs
Next year's market for PRNs will be influenced by the carry over figure for December – this December's PRNs can be used for 2004's obligation year.
While 2003 prices have slumped to giveaway prices – in one case, 20,000 tonnes worth of PRNs were offered for 80 pence each at the end of November – already there are signs that PRN prices for December could be on the rise.
One expert said: “The discerning buyer – the buyer who knows the legislation – is likely to buy in December because of the transitional tonnage available.”
2004 prices
In contrast to this year's prices, which have been around the 10 and lower, there are some expectations that the price for PRNs on average next year could be in the order of 25.
One large reprocessor told letsrecycle.com that they would “certainly refuse to sell any PRNs in the first quarter of the year if the prices remained at the level they were for most of 2003”.
He added: “If there are low prices early in the year we could see unprecedented rises later in the year.”
Accreditation
Some reprocessors – particularly in the plastics and paper sector – had been talking about not even bothering to get accreditation in 2004. Even some larger businesses saw the extra costs and administration involved in issuing PRNs as not worth the return. However, this sentiment is likely to change with the announcement of the new targets.
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