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PRN Market Report – Wk. End : Friday 5th October 2018

PRN Market Overview

Renewed interest from general recycling buyers resulted in Glass prices increasing during the week. Buyers initially targeted Aggregate supply however when supply became hard to source many turned their attention to the Remelt market which resulted in prices increasing in both markets. An easing of Wood supply was evident with volume tonnage being offered to buyers albeit at higher than current market prices.

We are due to see Septembers supply figures reported next week and this coupled with the Q3 supply figures (22nd)  should provide some insight into the challenges ahead before the end of the compliance year. All prices, with the exception of EFW notes, have been at record price levels this year so one would expect to see supply in good health. Reflecting on the last set of figures released for Q2, we had seen a record return for Plastic yet over the last quarter prices have continued to rise. Some commentators have said that this has been down to the domino effect of Far East countries implementing more stringent quality protocols taking the lead from China. There has been some dispute regarding the actual figures with HMRC export numbers not tallying with reported prn supply for the year. Regardless of the ongoing debate regarding the current figures it is expected Plastic will again meet its target.

PRN Market Report – Wk. End : Friday 28th September 2018

PRN Market Overview

This week we saw the Steel note price fall for the first time any many months. It would appear that it is positioning itself at a level which will result in buyers targeting it for general recycling obligations. All other prices remained within their previously reported spreads.

The debate on Plastic waste continues to dominate media headlines with a groundswell of activity now focusing on new technologies to recover and reuse the material. One compliance scheme, Ecosurety,  has taken the lead and committed to securing all prns generated from Recycling Technologies new plant in Scotland. Recycling Technologies have developed a process in which the Plastic waste can be refined back into an oil product for a variety of uses. It is hoped that this will be the start of further developments in the Plastic waste sector but it will take considerably support from all stakeholders to ensure these new technologies succeed. Previous opportunities to develop new methods of dealing with the material became unstuck when the virgin oil price dropped and made the new products overpriced.

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PRN Market Report – Wk. End : Friday 21st September 2018

PRN Market Overview

Glass Aggregate and Paper prices increased this week as buyers continuing to target the lowest value material prns for general recycling obligations. The availability of Wood recovery notes eased with sellers offering volume tonnage to the market. Wood prices continued to maintain their spread with concerns still dominating this market.

Discussion surrounding the redesign on the PRN system continued this week with news on a new  group being set up to discuss the implications. The Packaging Scheme Forum held their first meeting to discuss the impending revision of the Packaging Waste regulations. The Forum has been established by 45 of the 50 producer compliance schemes and aims to inform and provide guidance to regulators regarding the existing system. The forum will also look closely at the upcoming consultation on revising the system and provide there in depth knowledge in meeting the renewed challenges ahead.

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PRN Market Report – Wk. End : Friday 14th September 2018

Market Overview

Unsurprisingly trading activity fell this week with many stakeholders heading to the RWM in Birmingham during the week. Much of the discussions taking place at the show centered around the current PRN system and what the future holds. It would appear that after many years of trying to fix a system that wasn’t broken they have now decided change is afoot.

My thoughts are that the system has continued to deliver on the principals on which it was founded, that being, providing financial support at times when recycling activity is weak and vice versa. Over the last number of years the supply information has not reflected the price position of some materials, namely Plastic, and this will no doubt have added to stakeholders concerns regarding the validity of the current system. While I feel the time is right to redesign the system it would be foolhardy to start a fresh or copy other producer responsibility regimes which have failed to work. More focus needs to be placed on developing the UK’s infrastructure by incentivising domestic recycling. In addition I feel that those businesses who development more environmentally packaging should be provided with some form of credit for the good work they undertake.

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PRN Market Report – Wk. End : Friday 7th September 2018

PRN Market Overview

The Aluminium market was the only one to record increased values this week with prices firming up to £40.00 per tonne. All other markets maintained their previously reported price levels with reasonable volume trading across all materials. Concerns were raised regarding Plastic supply when the market was informed of a major exporter being suspended from issuing evidence notes however this suspension has now been lifted.

August’s monthly supply report highlighted a downturn in Paper and Plastic supply when compared against the corresponding period last year. If viewed in isolation it could raise concerns however, as has been the trend this year, the middle month of the quarter has consistently been the weakest reported. With a strong figure reported for July (104k) it is expected a good September return will keep the market on track for the year. As to how the price will react to this news it is anyone’s guess given how prices have reacted to positive news over the last 18 months.

This week will see the great and good of the industry head to the NEC (Birmingham) for the annual RWM show. As someone who spent many years attending as an exhibitor it was good to see it streamlined into a two day event as often the last day was quiet, partly due to a lack of attendee’s but also due to the recovery period required from the industry functions from the previous night. I will be in attendance on Wednesday and look forward to catching up with existing clients and hopefully attracting some new ones. I look forward to seeing you all there.

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PRN Market Report – Wk. End : Friday 31st August 2018

Market Overview

After two weeks away from the office I was surprised to see further increases in Plastic notes values. Prices increased up to £70.00 per tonne as stories emanated around further import restrictions to oversubscribed far east markets.  Paper, Steel and Glass prices reported small increases as buyers sought out best value for their general recycling requirements, tightening supply in each material. Wood prices have stabilised, albeit at record price levels, and Aluminium volumes reported a small lift due to increased demand.

Prices in Plastic rose as exporters reported concerns about the viability of new end markets to take tonnage, which would have previously been destined for the Chinese market. As volumes destined for these markets have grown, they have become backed up with material leading to internal logistical problems. This, coupled with newly introduced export restrictions in these end markets, has increased concerns surrounding the viability of said markets going forward; this has resulted in the latest price increases.

The Wood evidence note price has remained stable with reports that at current price levels it is providing strong competition for material previously destined for the bio mass market. A review of the latest published monthly return figures highlights that the average monthly return in Q2 has growth of 10k on the previous quarter. This provides the strongest indication yet that the increased note values are having the desired effect of increasing supply. At current levels the market will satisfy this year’s requirement, although with little carry out and increased targets due to result in demand going up by a further 70k next year, further price increases cannot be ruled out. 

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PRN Market Report – Wk. End : Friday 10th August 2018

PRN Market Overview

Trading activity continued to improve this week with prices in some material prices softening to towards buyers positions. In Glass, both note high end values softened by a margin of 25p per tonne resulting in volume trading. Wood values continued to increase up £5.00 per tonne on the previous period, the highest increase recorded this week. Smaller obligated Paper buyers paid a small premium to secure their annual obligations. In Aluminium, prices increased slightly for moderate volume, up £2.50 on the previous week with trading recorded at £32.50.

July monthly figures were released this week and reported an increase in Paper and Steel volumes when compared to the same period in 2017. This was to be expected given the higher note values recorded this year as general buyers circle both markets. All other materials reported tonnages down on the previous year. In Aluminium, it is believed that some sellers implemented maintenance programs during the period resulting in the weaker volumes reported but no long term issues are expected.

We saw further reports of export restrictions this week along with more negative commentary regarding the state of recycling capacity in the UK. These issues are nothing new to those in the industry and it is heartening to see a more collective effort in addressing them moving forward with reports that the quality of material now being produced from materials recycling facilities increasing. It is hoped the increased quality of material along with the effects of the current competition between the USA and China in impose punitive import tariffs may yet result in a resurgence of Chinese material trading opportunities for UK exporters.

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PRN Market Report - Week Ending Friday 27th July 2018

Market Report – Wk. End : Friday 27th July 2018

A week on from the Q2 supply report which showed great improvements across all materials and we have seen very little effect on market prices. There may be numerous reasons as to why this has occurred. Traditionally demand softens at this time of the year as most traders head for the beaches and this year was no different although many had been watching for news on supply. When it was announced, reporting a more positive position many will have turned off their phones and returned to the beach. During the week, as has become the norm, we were greeted with news of potential export problems stemming from new end markets and this resulted in a softening Plastic price rebounding. All other material note values held their previously reported price spread in what could be best described as the slowest trading week of the year.   

While weak trading activity has contributed to the lack of price movement this week, the analysis of the Q2 supply report will have played its part as many waited for evidence of how prices would react. Differing opinions created by the inclusion of this year’s “Carry In”  tonnage being used in 2018 or 2019 saw predictions of relief or concern. The “Carry In” tonnage is the buffer supply provided by last year’s activity, to be used in times of short supply. It has become commonplace to discount this tonnage as it traditionally gets pushed forward into the following year. I believe that this should be included within the supply analysis for the purpose for which it was designed. The table below shows the “Carry In” included,  and projections on required tonnage for Q3 & Q4. Within what looks like a relatively easy task there will be some surplus created which will be carried into 2019. This will be reported at the end of the compliance year to allow it to be factored into next year’s analysis.  The “Carry In”  information we have to hand this year should be utilised to address the concerns we have this year.

PRN Market Report – Wk. End : Friday 20th July 2018

PRN Market Overview

Trading activity slowed this week as buyers, buoyed by good volumes reported in the June monthly report, decided to hold off committing to current market prices until after the published Q2 supply figures were released. Paper traded in small volumes with prices holding at the previously reported level of £15.50. All other materials reported little to no activity.

The Q2 supply figures released over the weekend reported a strong performance across all markets with the exception of Glass Aggregate supply. The Glass Remelt market is currently creating enough excess to cover the additional Glass Aggregate demand and at current rates may provide some tonnage to General Recycling pot of demand. Plastic supply increased by 30k on Q1 and prices are expected to soften given the news. In Wood, supply increased by 35k in the quarter confirming that this year’s prices are starting to have the desired effect of increasing supply. Both metal grades reported improvements on Q1 with Steel looking like it will create excess of 100k which will provide additional comfort to general recycling buyers. Paper volumes were up and continue to improve.

This latest set of supply figures report improvements across the board and certainly appear to favour buyers. With good excesses now being predicted in Steel, Glass and Paper it is hoped this will lift some pressure off the Wood market.

CIWM Article - 2017 Review - One Door Closes as another Opens.

Now that the 2017 packaging compliance year has drawn to a close we look back at the issues surrounding last year’s compliance and look forward to what 2018 has in store.

The 2017 compliance year opened with packaging recovery note (PRN) prices trading at similar levels to 2016. Plastic was the highest value note at the start of the year and would continue to hold stakeholders attention throughout the year. Early trading was £25 per tonne however when media articles started to circulate regarding more stringent import controls on material destined for the Chinese market, prices started to increase. Concerns continued to dominate discussions during Q2 with news articles being printed every week highlighting them.

The PRN system was designed to increase price during a shortage to encourage more reprocessing or investment in capacity by having a more expensive note.  In other words, if there is a shortage then the price goes up and vice versa.  Historically this market mechanism has worked.  

Analysis of the reported monthly supply figures allowed stakeholders to get an early insight into the potential scale of the problems ahead.  During 2017, against the background of strong supply the evidence note price continued to increase to three times the starting price. This de-coupling of supply and price was initially challenging to understand.

As the year progressed it became clear that the Chinese authorities were preparing to continue implementing more stringent import controls with the introduction of the new National Sword protocol aiming to not only restrict lower grade plastic material but also target mixed paper grades. Confusingly, this news did not have the same effect on the Paper PRN price as seen in Plastic.

The confirmation of record breaking target increases (in real terms by around 70%) for Wood from 2018 onwards coupled with a downturn in packaging grade material going to recycling plants resulted in a tightening of supply towards the end of the year. This resulted in prices increasing from £2 to a high of £10 per tonne.

A dramatic increase of more than a factor of 10 in the Aluminium note value in the final days of the compliance year once again left many scratching their heads as again supply had indicated a surplus supply throughout the year.  Suggestions of market making or manipulation have been heard in the industry.

Looking forward to 2018 there do appear to be many challenges ahead. Plastic once again dominates early year discussions but if the system is to work as it is designed to, one would expect a more stable year.  We have already seen higher note values assist in identifying and facilitating exports to new end markets in 2017. One can argue that at some stage those new markets will become oversupplied and exports could slow again in which case we may see an increase in prices later in the year.

In order to fully address our reliance on export markets we need to be investing more in domestic reprocessing plants.  There has been limited success and many failures previously.  This has been attributed, in part, to a lack of support from the PRN system.  The higher values previously assisted with the export of material as opposed to incentivising domestic reprocessing facilities. 

Given that quality standards are starting to increase in the end export markets focus, has shifted back to development of domestic facilities and the higher value PRN should go some way to assisting this process. Indeed the recent announcement by Beauparc Utilities is the most recent of at least four new facilities opened or being planned.

With the weight of media attention now firmly focused on Plastic pollution it is expected this story will continue to develop this year so watch this space!

Ian Andrews