July was a weak month across most grades which points to some issues in Europe however it’s important to keep in mind that whilst the Environment Agency (EA) have released an obligation for 2022, we are working with a projected obligation as we are aware that there are still several large producers that haven’t submitted their data for this year.
Paper and board
Whilst paper and board had a strong month against its monthly requirement, we’re still seeing major issues in the paper commodity market with little hunger for paper or board in Europe. The commodity price has collapsed resulting in additional challenges in exporting therefore increasing the PRN prices.
This also has a strong impact on general recycling as paper is one of the main grades used to fulfil the general recycling obligation.
Glass remelt and glass other
Glass remelt had a much stronger July however the glass aggregate deficit has grown, putting additional pressure on the remelt PRN price despite its strong performance. With the high remelt price, feedstock continues to get diverted to the remelt process and reprocessors are mainly focussing on remelt.
In July aluminium fell short of its monthly requirement by a small margin, whilst we are still ahead of the requirement year to date this weak month has had a big impact on perceived availability of aluminium PRNs. As it’s so close to being on target this might be one to look out for to see if it gets a boost from the quarterly data.
July saw a steep decline in the amount of tonnage that was reprocessed or exported, this is the first month of the year that we’ve seen steel struggle. Following the loss of the right to use red diesel, the costs of reprocessing steel has increased dramatically, and more tonnage is having to move through export.
Following a significant boost from quarterly data in June, July saw a major shift in the plastic market with exporters now also struggling to find capacity for plastic in Europe. Tonnages have started to trail off, this doesn’t seem to be an issue with commodity pricing but instead with capacity. The increasing costs of the recycling process and other economic factors are resulting in smaller reprocessors having to implement temporary shutdowns and take other cost saving measures.
Wood has almost met its total requirement for the year, however with the expectation that it will make up a significant portion of the general recycling requirement and with strong ties between wood and the paper PRN, we’re still seeing pressure on the PRN price in spite of the over production.
“July was a relatively weak month across the board, this raises concerns over paper and plastic, and continues concerns about the overall performance of glass.
There seems to be barriers to exports into Europe across several grades which could be the reason for July being a weak month, as well as other issues such as increasing energy costs at home and abroad having a significant impact on recycling.”
– Ed Ewence, Head of Procurement, Clarity Environmental