Quarterly data released for Q2

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. This is significant because although the data provided by the EA appears to signify that several grades are above target, with these expected producers yet to register, we believe that several grades are actually struggling to meet the national obligation for this year.

Paper/board

The release of the Q2 data has made it apparent that paper and board has begun to fall behind meeting this year’s increased obligation (6,500T), which is reflected in available volumes. With concerns over energy and gas prices in Europe, particularly in Germany, paper mills are concerned about making large orders in a falling commodity market, which typically results in low availability and increasing prices on paper PRNs.

Whilst this is currently a small deficit against the paper obligation, having no paper available to contribute to General Recycling is where we may see issues.

 

Glass re-melt and Glass other

Despite a big boost from the Q2 data release (45,000T increase compared to monthly figures) and a substantial price increase, which should result in more reprocessing, glass re-melt remains behind target for the year to date. The high price of re-melt is having a direct impact on glass other, as reprocessors prioritise more of their feedstock toward the remelt process. With this in mind, confidence around re-melt remains high, so glass other looks to be the bigger concern (53,000T behind, putting us behind even the May requirement).

 

Aluminium

We saw a reasonable increase in aluminium numbers from the Q2 data report (6000T against an 11,000T monthly requirement). Whilst it has been consistently just above target, we are now significantly ahead. However, due to a perceived lack of availability from suppliers, we are continuing to see pressure on the price of aluminium PRNs.

 

Steel

Steel was the standout grade in the Q2 data report, as it has gone from looking dire to being significantly over target. This is partially due to increased reporting but also due to some major reprocessors getting their accreditations later in the year for 2022. The 44,000T increase in the quarterly data represents 28.5% of the overall requirement for the year-to-date on its own, so could lead to softening in the price over the coming weeks.

 

Plastic

Plastic is in an interesting position as it appears to have fallen 10,000T behind its monthly requirement.

Considering the overall plastic requirement this is a relatively small deficit and, unlike other grades which are behind, there are still several large reprocessors and/or exporters who have not submitted their Q2 recycling figures. Once we factor those in, the plastic is likely ahead of target and this may be why we are starting to see the price soften.

 

Wood

Wood remains the grade that has consistently overperformed in 2022, staying ahead of target month to month, and has already met the requirement for October (85,000T ahead). Despite wood’s overperformance this year, the poorer performance of paper means there remains a strain on wood to contribute towards the general recycling obligation. It is for this reason that wood continues to increase in price.

"The available data suggests a relaxed state of play in July, however once we consider that some large retailers and brand pack- fillers/importers are still to add their obligations, it becomes clear that the demand for PRN's this year is larger than what we can see in the public data."

Martin Trigg- Knight

Martin Trigg- Knight, Head of Packaging, Clarity Environmental continued:

“The available data suggests a relaxed state of play in July, however once we consider that some large retailers and brand pack- fillers/importers are still to add their obligations, it becomes clear that the demand for PRN’s this year is larger than what we can see in the public data. We should expect a tight next few months for glass and paper, but potentially a more relaxed plastic outlook. The relaxed plastic outlook is in part because of the high PRN price stimulating plastic recycling in the Uk and facilitating exports. If the heat of this summer continues to influence drinking patterns how we often see it does, then we could see the glass production correct itself towards target as the year goes on. 

Increased drinks consumption across a hot holiday season should, at the very least, increase the volumes of glass consumed and collected. The high PRN price should help this material to make its way through the commodity channels into new glass from the better collections, and aggregate from lower grades. It’s certainly true that the mix of glass colour collected is now different from that usually needed by UK glass manufacturers. Although this makes things more difficult, the high PRN price should help all colours find a home, even if that home is sometimes in European glass plants.”

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