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‘Slow start’ in PRN markets leads to price hikes

Provisional packaging recycling data published by the Environment Agency for the first quarter of 2022 has shown that paper and plastics in particular have had a “slow start” to the year.

Some compliance specialists have warned that as a result, prices for some packaging waste recovery note (PRN) material streams, such as paper, have increased sharply.

But, others in the sector have said there is often a dip at the start of the year, as many reprocessors are still in the process of securing accreditation to issue PRNs.

As outlined below, the biggest drop was recorded in paper which fell from 993,998 tonnes in Q1 2021 (January to March) to 843,626 tonnes in the provisional Q1 2022 data.

Glass remelt was the only material to see a rise in Q1 2022, after recent high prices

Year-on-year reductions were also seen in plastic, steel, glass other and aluminium.

The interim data was published on 22 April,  but some caution was sounded that data had not been submitted from Northern Ireland and other reprocessors. This meant wood and plastic have seen rises in tonnages since the data was first published.

The data is still to be verified but price rises have been reported across different material streams on the back of the publication. Verification is expected to come from the Environment Agency later this month, with producer obligations for 2022 due to be set.

Market

Andrew Letham, operations manager at The Environment Exchange, the PRN trading platform, explained that an administration error from the Northern Irish Environment Agency had extended the reporting deadline for Northern Irish companies until 30 April, hence the change in data.

However, he said the data points to a number of materials “underperforming in Q1 which has led to significant price increases in paper (+102%), plastic (+22%), steel (+47%) and wood (+50%).”

He added: “Applying the increased recycling targets to last year’s packaging handled shows that a number of materials would miss target in year at current recycling rates.

“It is hoped that higher PRN prices will stimulate the markets, otherwise it could be a very expensive year for producers.”

There is often a dip in reprocessing numbers at the beginning of the year.

– Valpak

‘Normal’

A spokesperson for Valpak explained that while at first sight the fall in amounts reprocessed are of concern, “there is often a dip in reprocessing numbers at the beginning of the year.”

EU waste shipment
Some suggested that the fall in paper has been put down to difficulties in the export market (picture: Shutterstock)

They said one of the main reasons for this is the large number of reprocessors who are not accredited in time for the start of the year for various reasons. “So far, around 80 of the 520 or so accreditations have been added since the start of the year including 13 since the start of Q2. It is likely that there are still a significant number to be added on over the next few months.”

They added that when PRN  prices are low this also “deters some reprocessors from getting accredited”.

The spokesperson continued: “Most concern continues to remain with glass and plastic, as was the case last year where the end of year figures were tight and carry over of PRNs into 2022 was lower than from the previous year. In addition, steel has seen a significant drop compared to Q1 in 2021.

“There are likely to be some significant adjustments in the packaging reported by obligated businesses as the economy picked up and hospitality began to open up after the easing of Covid restrictions.

“Some of the increased sales that went via obligated retailers in 2020 will have switched back and reported packaging flow is likely to be a bit lower, especially for glass.”

Exports

On his 360 Environmental blog on 23 April, former chair of the Advisory Committee on Packaging and waste consultant Phil Conran said the data is lower than expected, with some figures “that will be likely to have a significant impact on PRN prices.”

Phil Conran is the former chair of the Advisory Committee on Packaging and a waste consultant

He explained that this “suggests that the majority of the falls, especially paper, relate to lack of available waste.”

Mr Conran added: “Is this down to a Covid buying spree hangover? But there are also other issues. Export problems into Europe. Shipping concerns because of the Ukraine situation. Tightening EA accreditation requirements. Export markets issues such as tighter controls into the Netherlands in relation to the definition of recycling”

‘Slow start’

Sandeep Attwal, group procurement manager at Ecosurety, said the provisional packaging data for Q1 shows a “slow start for recycling in the UK”, although she also pointed to the fact there are several reprocessors and exporters that need to complete their Q1 returns.

“Whilst we wait for the 2022 demand to be published to understand the real impact of low supply figures the market has already started to react with PRN price increases across all materials,” she explained.

‘Incentivise’

Martin Trigg-Knight is head of compliance at Clarity Environmental

Martin Trigg-Knight, head of compliance at Clarity Environmental, said the 2022 quarterly data shows lower PRN production across all grades, other than glass remelt.

“This shows a good response to the higher priced PRNs of Q4 last year, and the higher starting PRN prices of 2022,” he explained.

Mr Trigg-Knight said a higher PRN may be necessary to further drive recycling in currently difficult export and energy markets.

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