The most recent release of recycling data (as of 29 April 2019) from the Environment Agency is now available which details the Q1 2019 progress of the UK against its recycling targets for the year. This data is much anticipated considering the current PRN market climate in a year of increased recycling targets as well as reduced carry in levels for a number of key materials
At this stage the data is still classed as ‘unverified’ meaning that there are still some accredited reprocessors and exporters to report their data, however, it’s still incredibly useful to interpret and to outline potential effects on the market. We’ll be publishing a further update upon release of the verified data on 15 May.
The Q1 data is quite mixed with some materials starting to show promise for the year ahead with good progress, however, there are also some potential areas of growing concern with other materials.
We have provided a summary as follows for each material's recycling performance indicated by the data below, along with graphs to illustrate the percentage of recycled material against the targets using the latest estimated UK obligation data. This information is yet to be released by the Environment Agency so in order to gauge each material's progress, we have used the final 2018 UK obligation complete with 2019 targets to provide the estimation.
Figure 1: Recycling rates after Q1 2019, excluding carry in tonnages from December 2017
Figure 2: Recycling rates after Q1 2019, including carry in tonnages from December 2017
Please note – PRNs generated in December can be used in either the year they are generated or the following compliance year. ‘Carry-in’ PRNs are PRNs generated in December that were not required in the compliance year they were raised in so they are carried forward for use in the following year. The graphs above show Q1 recycling data both with and without carry in tonnages taken into consideration.
Paper – Q1 rates here show Paper at 30% of its own material specific target without carry in, and 36% with carry in considered. This is very positive and the data shows that progress has been made in making up the deficit at the start of the year caused by weaker carry in levels. It’s still early in the year but if positive levels of recycling can continue, it seems likely that just as in 2018, Paper will be a key material being utilised to help fill the UK’s ‘General Recycling’ obligation. In terms of market rates, it seems probable that there won’t be any major swings in PRN prices at this moment in time, but it remains a material to keep a close eye on with potential for prices to soften.
Steel – Much like Paper, Steel also had a reduced carry in meaning a positive Q1 is important to keep it on track. The figures indicate that without carry in Steel was above target at 26%, and reaching 31% when the carry in is taken into account. This shows a good quarter for Steel recycling and that the poor handover from 2018 may well have been repaired. However, again like Paper, Steel played a big part in helping the UK reach its General Recycling target last year, which will likely be the case again in 2019. This extra pressure to perform well will possibly see PRN prices stay fairly stable for the time being.
Glass – In 2018, reduced levels of Glass Other recycling held back the progress of the total Glass Recycling level and Glass Remelt recycling levels had to help make up any shortfall. The Q1 data here currently shows much improved levels of ‘Other’ recycling and when combined with Remelt levels Glass sits above target at 28% without carry in. It’s likely the higher PRN price for Glass towards the end of 2018 will have contributed to the increased Glass Other recycling levels, as increased prices have meant the cost of shipping glass to other countries for channels such as the construction industry, can be covered much more easily. If the positive rates continue in this way, Glass could well be looked at to help fill General Recycling as well.
Plastic – Plastic had a reduced carry in from previous levels around 70,000 tonnes to just 20,000 tonnes this year meaning there has been and remains immense pressure on Plastic recycling levels. The Q1 data shows that even with this reduced carry in fully included in the data, we sit behind target at only 24%. Since the loss of the Chinese export market last year, smaller export markets have been utilised but the capacity to export still remains reduced and these smaller markets also present challenges of their own through factors such as foreign policy and capacity levels. It remains clear that the UK needs to improve its plastic recycling here at home and steps are being made by businesses in the UK to fill this gap. However, it takes time to become established and to affect these data levels meaning for now the PRN market remains highly volatile. Plastic PRN prices have been on the rise for almost a year now and this data combined with the increased recycling target is causing prices to continually rise.
Aluminium – Last year, despite positive recycling levels Aluminium PRN prices remained high. It was thought that there were issues with the release of the actual recycling evidence which may have been causing rising prices, so again it was important that we had a good Q1 to help highlight any of these potential issues. However, when looking at the current data we can see that without carry in Aluminium only reached 21% of its target and only just completes its target when all carry in is included. This means that with weak data alongside potential issues in the industry, PRN prices have remained quite high and the market has potential to become quite volatile and unpredictable.
Wood – Over the last year and the start of 2019, Wood has demonstrated exactly how the PRN system was designed to work. Higher prices last year due to perceived difficulties in the market meant more incentives to recycle through routes that generate a PRN, meaning increased recycling levels and in turn this caused price reductions due to good levels of supply. The Q1 data shows good recycling levels at 33% of its target without carry in which will also bring Wood back into the frame of contributing towards General Recycling, as it has done historically with the exception of last year. The percentage increase on Wood recycling target is quite sizeable though so it remains a key material to watch but does have good potential for PRN prices to reduce.
To summarise, it really is a mixed bag with positive news in terms of Paper, Steel, Wood and therefore, General Recycling. However, the Aluminium and Plastic market look set to remain fairly unstable for the coming months. These materials more than most will require a much improved Q2 recycling level in order to hold back the tide of rising PRN prices.
We recently held a PRN webinar providing an update on the data above, the PRN market itself and Comply Direct PRN prices. If you wish to access the webinar recording and slides you can do so from 'The Resource Room' within your online member account (from 'Packaging Resources' specifically). If you have any questions at all please don’t hesitate to get in touch with your Account Manager directly, myself (Ash Clay) or Sarah our Commercial Director - firstname.lastname@example.org / email@example.com