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Q2 2020 Unverified Recycling Data Released - Procurement Leader Ash Clay discusses the UK's progress against targets

22nd July 2020

Ash Clay

The unverified Q2 recycling data for 2020 has been released by the Environment Agency today (22 July) which holds key information in tracking the UK’s progress against it’s 2020 recycling targets, during a year which was anticipated to be impacted heavily by Coronavirus

Q1’s verified data indicated that the UK had made a good start to the year in terms of recycling levels achieved, however, there were big question marks as to how Coronavirus could start influencing figures, as at that time, it was such a great unknown to all UK packaging producers, schemes and regulatory bodies alike.

This means that today’s release of unverified data for the second quarter of the year is key in understanding this impact, where it leaves us as a country and the task ahead.

Q2 Recycling Data

Figure 1.1: Q2 2020 packaging recycling levels without carry over PRNs from December 2019 included

Figure 1.2: Q2 2020 packaging recycling levels with carry over PRNs from December 2019 included

Paper

As we can see from figure 1.1, without carry in levels included, Paper has reached 57% of it’s annual target at the half way stage, and from figure 1.2 we can see that with the carry in, Paper reaches 66% of it’s overall annual target. It has shown good progress through the year and while its positive news in that it’s ahead of its own specific target, Paper PRNs have typically helped fill the extra ‘General Recycling’ obligation and therefore, at this stage in previous years, we’ve seen it outperforming it’s current progress. As this is the case, it may mean slightly more pressure remains in the paper PRN market as buyers search for good value PRNs to help fill General Recycling, which can be filled by PRNs of any material other than ‘EfW’ or ‘recovery’. In general, however, it’s still welcome news that Paper is currently ahead of its target.

Wood

Wood remains in a similar situation to Paper in that historically it has helped contribute to General Recycling, is performing okay, but has historically seen higher levels at this stage of the year. Early data from Q1, as well as monthly data released by the Environment Agency throughout Q2, did show that Wood recycling was suffering during the height of the UK lockdown, however, this has improved since lockdown has begun to ease and it appears material is flowing through the system again. Again, like Paper, pressure in the market will remain but it’s shown really strong improvement and sits ahead of target.

Glass

Glass is still quite tight to its recycling target, however, when you consider that for almost the entirety of Q2 the UK has had no hospitality sector, this really shows how strong the data appears for Glass recycling. Glass Remelt has surpassed its target and therefore, despite Glass Other or Glass Aggregate recycling falling short of its target, you can see from figure 1.1 that without carry in it still rests 1% above target. With the insurance policy of a good carry in, figure 1.2 shows how it reaches 55% of its overall target at the halfway stage.

Aluminium

Despite its struggles last year, Aluminium has become the standout performer in terms of recycling levels for 2020. We had a very strong Q1 with an influx of sellers into the system (driven by last years high prices), a good carry in level from December 2019 as well and now we can also see that Q2 has been just as strong again. Overall, without any carry in taken into consideration, Aluminium has reached 63% of its overall target which holds potential to continue to reduce PRN prices and lessen pressure in the market.

Steel

Steel is another material showing good upturns since lockdown eased and it ultimately means that without carry over, as you can see in figure 1.1, we sit at 56%. Therefore, Steel is a touch more comfortable than the likes of Glass, therefore, if the improvements continue into Q3, it may well be likely that Steel PRNs could also contribute to General Recycling.

Plastic

Figures 1.1 and 1.2 both highlight how Plastic has had another great quarter and recycling levels for this material have now remained consistently strong for a significant period now. After a good carry in level propped up an even better start to 2020, with today’s release we can see that without carry in considered we have already reached 57% of the overall annual target, which is a far cry and massive improvement from this point last year.

This is positive news, however, with Plastic there is always a lingering threat of volatility. It has been proven that many exporters of Plastic have been struggling in recent months due to a lower PRN price, being unable to support their shipping as well as other obstacles such as those posed by coronavirus. Therefore, it is expected that Q3 data may not be quite as strong as the start to the year.

Recent discussion from within the industry has also started to shine a brighter light on potential fraud within the sector, which remains to be proven with any follow up action, however, we must always consider the potential future impact this may have, especially on the PRN market.

All things considered though, the UK sits in a comfortable position with a low pressured market at present which is very welcome news, especially considering the position we were in this time last year.

Energy from Waste (EfW) or Recovery

Energy from Waste continues to perform okay and remains ahead of targets. Supply of EfW PRNs does seem to be in constant flow due to large, and growing, numbers of facilities across the UK generating EfW PRNs, so it looks as though the UK remains on track to hit this specific target.

Other important factors

The progress of these materials is tracked against the current UK total obligation. In previous years, as more and more producers complete late submissions of data, and new previously unregistered companies come into the system, this would typically grow.

However, this year this is likely to evolve slightly differently. Unfortunately, due to the current climate, many UK producers are struggling and some have even gone out of business and therefore, fallen out of the system. When this happens, a producer’s obligation will be lost which will reduce the total obligation and therefore. the number of PRNs required to be bought for the year. It means that for 2020, we may well see a final obligation with stunted growth and a final figure somewhere close to where the total already stands. Or, if problems accelerate, we may even have a reduced obligation. It remains to be seen however, if any reduction in obligation would reduce pressure in the markets which in turn holds potential to impact PRN prices.

At this stage, the data is still unverified which means the numbers do have potential to change before the verified release on 10 August. We can see that from the initial release, there are still a number of reprocessors and exporters yet to report on their figures, meaning that it is likely these overall recycling levels for Q1 may grow further still.

Summary

Overall, the data release has proven the recycling sector’s overall resilience in the face of current difficulties which is very positive, and PRNs and the system itself have proven once again to be strong enough to withstand the most difficult of tests.

As always, we’ll remain on top of all the data available and all the markets on your behalf. After the verified version of the data is released, we’ll be running another update webinar for our members, to discuss everything in greater detail. The next member PRN update webinar will be on Wednesday 12 August at 2.30pm and you can register for your free place HERE

If you have any questions at all, please don’t hesitate to get in touch with your account manager directly or on packaging@complydirect.com