Trading has so far been slow for January 2004 PRNs, as businesses and schemes finalise their obligations for 2003 and tie up loose ends using December PRNs carried over into this month. Overall, the market appears uncertain as to how prices will shape up this year, especially since official reprocessing figures for the whole of 2003 are not yet available.
This market uncertainty is apparent in the differences being seen between the prices some reprocessors are hoping to get for 2004 PRNs, and prices being offered.
The general feeling about the carry-over of 2003 PRNs into 2004 is of “substantial” availability. Prices for carry-over PRNs as a result have been “ridiculously low”, averaging 5-8 a tonne.
These low prices have crept over to influence the prices for 2004 PRNs in January – particularly in paper, plastics and wood, which continue to sell for under 10 a tonne.
Some brokers have been urging their clients to take advantage of these low prices in the expectation that prices will rise as reprocessors review their PRN prices in February. Expectations of price rises next month could be behind a flurry of activity reported by some traders who spoke to letsrecycle.com.
Paper PRNs are selling for around the 8 mark, but while this year's paper business targets have not risen particularly steeply from those of 2003, paper PRNs have been traditionally popular in making up overall recovery targets and will be important for this year's minimum recovery by recycling target.
- Click here for more information on the 2004 business targets for packaging waste recovery.
Prices for glass and aluminium PRNs are higher than the other materials, reflecting the greater task faced by reprocessors in reaching significant increases in business targets for glass and aluminium.
In glass, reprocessors believe 2004 PRNs are worth 25, but trading has seen them going for as little as 15 a tonne. Again, price rises from the average range of 17 to 23 are being anticipated by both reprocessors and compliance schemes.
Few 2004 aluminium PRNs are being traded at the moment, as reprocessors are generally holding on to uncontracted notes in the hope that the market will settle and prices may increase from the low to mid-20s. While the 2003 average for aluminium PRNs was in the mid-teens, experts in the sector told letsrecycle.com they fully expect the 2004 average to be in the 25 to 30 range.
Valpak
Some initial feelings may be garnered from Valpak's predictions for how much it is likely to charge members for PRNs in the first half of 2004. The UK's largest compliance scheme plays an important part in the market in which it has a majority share. Over the past year it has developed its long term contracting for PRNs and this has been seen most clearly in its deals to secure glass PRNs from Berryman and Rockware.
In its plans for the first quarter of the year, it has suggested a cost to members of 27 for glass, 13 for paper, 33 for aluminium, 20 for steel, 15 for plastics, 13 for wood. These prices include Valpak's administration charge.
Compared to Valpak's average charge for PRNs in 2003, prices for most PRNs are up by 5 to 10. Plastic PRNs have risen by only 3, however, and paper PRNs have remained the same as the 2003.
Reprocessors
There remains something of a dilemma for reprocessors who are keen to ensure they sell their PRNs – some have been left with surpluses in 2002 – while they also seek to maximise revenues.
One reprocessors said: “We continue to see a situation where PRNs do not have a sufficient enough value to help fund the development of infrastructure which will be needed in the future. It is again an example of short-termism by the UK government.”
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