The latest prices for most materials see PRNs changing hands for as little as 5 each, except in the aluminium stream, where prices are a little higher.
Prices have been sinking ever since January 2003. Questions are now being asked about why some compliance schemes appear not to have not been reflecting the low value of PRNs in the charges being demanded from members.
For example, prices of paper PRNs have been steadily dropping since January, when it was between 12 and 15 a tonne. However, letsrecycle.com has seen documentary evidence of at least two compliance schemes invoicing members for at least 23 a tonne for paper PRNs from January to June 2003.
Other compliance schemes have been charging between 13 and 15 a tonne for most materials in that period. This disparity between prices has already come to the attention of some reprocessors, not helping the animosity felt by them towards some compliance schemes at the moment.
One reprocessor told letsrecycle.com: “The amount some of the compliance schemes have been charging their members for their PRNs, you'd; think they'd; be able to pass on some of that to the reprocessors – we're getting virtually nothing for PRNs, and there are firms going to the wall because of it. Those compliance schemes have to be very careful – if they're treating reprocessors this badly now, you can bet reprocessors will get their own back next year, when the targets go up and it's much more difficult to get hold of PRNs.”
Yo-Yo
He added: “These schemes will perpetuate the yo-yo effect – as reprocessors get their revenge next year, prices will be high again. Last year they were high, too, and this year low – it's not helping anybody. Nobody can plan for the future when it's like that.”
However, one compliance scheme manager explained that a large proportion of the PRNs bought by schemes are through contracts, which may have been fixed at a higher price than has been seen in the spot market this year.
“I can't speak for other compliance schemes,” the scheme manager said, “but it is quite possible, for example, that contracts were finalised at the end of last year, when prices were at a level nearing 30 a tonne. Compliance costs for members will have to reflect that.”
But another compliance expert told letsrecycle.com that most contracts between schemes and reprocessors were reviewed quarterly. He claimed that following quarterly reviews this year, reprocessors have been offered prices edging down towards the 5 a tonne level, while scheme members were still being invoiced for around the 20 a tonne.
While it is tempting to say PRN buyers are pushing prices down, many reprocessors do accept that a lot of the problem is continuing because sellers are allowing prices to drop by their anxiety to sell. This happens both through panic, in a desperate attempt to get any value they can from the PRNs, or because they are looking for revenue to help cashflow.
This cash injection is particularly needed now, as the low PRN prices are having a knock-on effect on materials prices. The drop in prices of paper, wood and plastics this month have all been blamed – at least in part – on the weak value of PRNs. Even the price of aluminium cans – usually quite stable – has dropped by 30 a tonne this month.
Some good news for the PRN sector is expected later this summer, when the results of the investigation by DEFRA and the Environment Agency into alleged fraud in the wood PRN sector will be released. It is thought likely that the report will put forward some significant recommendations for action.
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