Q3 packaging figures positive for plastics

The data, for July-September 2013, published by the Environment Agency today (October 22) shows that recovery rates for plastic and glass packaging, have continued to climb from the levels recorded during the first and second quarters of the year.

Plastics has seen a marked increase in the amount of material processed, with 195,331 tonnes processed in the UK and abroad throughout Q3 compared to 153,640 tonnes in Q1 and 165,011 tonnes in Q2.

Despite fears early in the year that the sector would struggle to meet the 37% recycling target set by Defra, the plastics sector now appears to be on course to meet the target, with around 169,000 tonnes needed to be processed in the final quarter of the year, broadly similar to the level seen in Q2.

The increase in trading of plastics has been fuelled by a significant rise in the value of packaging waste recovery notes (PRNs) for the material which saw plastics PRNs leap from around 20-30 at the start of Q2 to 60-70 at the start of Q3.

The rising PRN price has been in part caused by the rising recycling target, as well as the restriction on the export of material to China the UKs largest overseas market for material, which began in February 2013.

‘Positive’

Commenting on the figures, Ian Andrews, senior market trader at the Environment Exchange, described the improved performance on plastic packaging as very positive but warned that a drop in the value of the plastic PRN could weaken the markets position for 2014, when the target is set to rise by a further 5%.

He said: Even though we are in a strong position at the moment, this is what we will need to be doing next year. I believe there will be a softening of the price, and we have already seen the spot market fall from 67 to around 54. The market needs to ascertain the trigger point that would enable export markets to remain open.

If we do see prices drop off significantly we are going to create problems for 2014. The final quarter of the year usually sets the tone for the next year, and producers will benefit from having a relatively strong performance.

Chris Taylor, PRN trader at Clarity Environmental also said that he expected PRN prices to fall in light of the data.

Theres a worry that December tonnage may be bought as carry-over for 2014 and leave the 2013 compliance year short. If thats the case, it would leave messy loose ends for those involved to tidy up.

I expect Plastic PRN prices to fall a little in light of this data. In the last week, they fell by as much as 15 as concerned sellers looked to cash in before any possible price crash emerged.

Glass

For glass, a total of 265,500 tonnes was reprocessed via re-melt applications, slightly higher than in Q2, while 149,811 tonnes were sent to aggregate processes. But, it is expected that there will be a shortfall of the amount of aggregate glass available at the end of the year with aggregate buyers likely to have to purchase PRNs at the higher re-melt price.

‘It is looking likely that certain schemes who may not have identified the early warning signs in the glass aggregate market could have to substitute these PRNs with the more expensive glass remelt.’

James Piper, Budget Pack

James Piper, commercial manager at Budget Pack, said: The figures for plastic and glass remelt suggest compliance within these markets is now achievable across the UK. However, it is unknown how dramatic any price changes will be due to the current uncertainties with 2014 targets and economic pressures on the market.

It is looking likely that certain schemes who may not have identified the early warning signs in the glass aggregate market could have to substitute these PRNs with the more expensive glass remelt.

We hope that all schemes realised the early indicators from the previous figures and adjusted their purchasing accordingly therefore minimising the impact on their members.

As a scheme looking to achieve the best price in the market Budget Pack is always pleased to see healthy figures which should lead to lower costs for producers.

Paper

In paper, the volume sent for reprocessing or export remains above the required level needed to meet the overall recycling obligation for the year, with a total of 847,375 tonnes being recycled in Q3 over a target of around 624,113 tonnes per quarter. This follows on from a similarly strong performance for the material in the first six months of the year.

Meanwhile, reprocessing of steel and aluminium have remained at broadly similar levels when compared to the first half of the year, and have both continued to remain on track to meet their 2013 recycling targets.

Commenting on the figures, Duncan Simpson, director of sales and marketing at Valpak said that the positive performance of the plastics sector could provide a good starting point for 2014.

He said: Overall it is good to have the numbers and we see that there are still some companies yet to report, although it is important to be aware that there can be changes to the obligation that could change the picture.

It is good to see a continuation of the good performance of glass remelt, although aggregate does appear to be short, but that could be a result of material that has been collected and stockpiled. Plastics looks to have performed well, even with the Green Fence in operation – hopefully that will provide a platform for meeting the higher targets in 2014.