Packaging data for the fourth quarter of 2019 has sparked optimism from the compliance sector about 2020 PRN prices.
In particular, the figures are seen as indicating that the price of packaging recovery notes (PRNs), particularly for plastics, won’t rise above 2019 levels in 2020.
The provisional data – published two weeks earlier than usual– show that all packaging recycling targets have been met, and a total of 499,000 PRNs were carried over from 2019, up from 354,000 in the previous year.
Despite concerns earlier in 2019 that the plastic and aluminium markets would struggle, and prices for both at were at record highs, both markets more than doubled the carry over levels from the previous year, as outlined below.
Sandeep Attwal, procurement specialist at Ecosurety, said: “Following the release of the final 2019 data which shows a very positive position for packaging recycling, we expect prices of PRN prices to be lower in 2020, COVID-19 permitting. The UK monthly data also shows an encouraging position for 2020. We are particularly pleased to see an increase in UK plastic reprocessing but there is still someway to go.”
Markets
The figures come as some businesses in the plastic recycling sector have expressed concerns over the impact of the global coronavirus outbreak (see letsrecycle.com story).
Recyclers told letsrecycle.com that particularly in the export sector, market prices are reducing in light of the coronavirus outbreak and that the oil price fall could also have an impact.
The data suggests that all targets were met last year
One business remarked that which way the market goes will depend on how much the PRN system supports plastics recycling should the price of virgin polymers drop because of the oil price crash. Some recyclers (eligible to issue PRNs) tipped the PRN price to rise to as high as £500.
Data
Despite this, both the 2019 data and the provisional data for the first two months of 2020 have sparked optimism amongst compliance schemes. The first two months have so far shown each category posting a jump compared with the same period last year, except EfW.
Sarah Foster, commercial director at Comply Direct, said: “Whilst there is uncertainty and legitimate concerns surrounding the effects coronavirus, oil price drops and exports, if we can undertake similar recycling levels in 2020 to those achieved in 2019, the UK 2020 plastic packaging recycling targets should be very doable and therefore plastic PRN prices may well not need escalate beyond 2019 average rates.
Phil Conran, chair of the ACP
“It has never been more important to use the data available and the facts when forecasting supply and demand, the current plastic PRN price is already high when compared to previous years which will hopefully keep the stimulus that appears to show in the recycling data we have available.”
Phil Conran, former chair of the Advisory Committee on Packaging, posted on his website 360 Environmental that the figures are “strong” but 2020 could be an uncertain period.
“Aluminium in particular is achieving the highest quarterly figure ever boosted by an exceptional level of exports. And despite all the worries at the beginning of the year, plastic recycling hit record levels with a strong surge in UK reprocessing and a recovery of export tonnages,”
Mr Conran added: “The question, of course, is whether these can be maintained through 2020?. The monthly data published last week indicated that so far, the high levels of quarter 4 recycling have continued into Q1. But with increasing concerns over the potential impact of the Coronavirus on exports and demand, ever-tightening quality controls both by the UK port inspection teams and overseas recipients, it promises to be another uncertain year.”
Compliance fee
The idea of some sort of mechanism to act as a lid on PRN prices is not thought to have gone away. Last year some in the PRN sector felt that it would be useful for aluminium and plastics PRNs. However, while there is still some lobbying for it, a compliance fee as such is thought to have been largely discounted by Defra because it would send the wrong signal to the marketplace.
“It has never been more important to use the data available and the facts when forecasting supply and demand”
Other options in how to approach the topic are thought to have been suggested. However, should the view of those who feel the data does indicate less pressure on the plastics PRN sector prove to be correct, the concept of a compliance fee might disappear.
On the other hand, there remains concerns about the aluminium sector and this could attract more attention over the coming months.
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Source: letsrecycle.com Plastic
