As we approach the halfway point of the 2015 compliance year, the UK packaging compliance industry finds itself in quite a bind when it comes to aluminium. Due to a number of factors there are currently not enough packaging recovery evidence notes (PRNs) being issued to fulfil obligations. As a result, prices for aluminium PRNs have been rising.
For the past five years aluminium PRN pricing has been steadily placed between £5 and £15, meaning obligated producers of aluminium have been accustomed to relatively stable and comfortable compliance costs. While producers have been suffering from volatility in the glass, plastic and to a smaller extent the steel markets, aluminium remained a robust PRN market without any problems - until recent months.
The aluminium recovery market has been brought to this point by changes in packaging protocols. During 2015 some aluminium packaging protocols have been abolished. This followed criticism that certain material contained much less packaging than initially thought, with the result that reprocessors and exporters are no longer able to claim PRNs on “old rolled” aluminium. In an effort to balance out this change, Defra introduced the ability for energy from waste incinerators to claim aluminium PRNs for their bottom ash. However, very few PRNs have been issued through this route to date and as a result Q1 recycling & export data for aluminium has shown a shortfall overall.
These factors have led to the trading of aluminium PRNs grinding to a halt, as sellers, highly aware any shortfall will result in higher prices, hold back on sales in the hope that once trading picks up again, acceptable buy prices will be higher. Single figure tonnage has been trading at a low level at £30 per tonne, but this is merely a result of buyers coming to market at the same time as their annual budgets allow to clear their entire obligations.
Chris Taylor, Commercial Manager at Clarity said "The nation’s buyers are waiting with bated breath for the publication of Q2 data in July. If aluminium PRN notes remain scarce it promises to be a challenging summer ahead for producers required to meet their obligations for aluminium recovery."
Our specialist compliance team at Clarity can provide cost effective solutions for producers who need to meet packaging recovery obligations. Our team are waiting to hear from you on 0845 129 7177.
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