Yesterday (22 July) saw the release of the Q2 unverified quarterly packaging recycling data, outlining total amounts of packaging volume to have been reprocessed or exported in Q2 2021.
The data was eagerly anticipated by all stakeholders, as there has only been access to less reliable monthly information since the initial Q1 data release back at the end of April, which is more open to interpretation, and in this time, some PRN markets had started to become more unsettled and volatile, such as Glass and Plastic.
Strong recycling levels seen in this initial data set will hold the potential to remove pressure and stabilise markets, and likewise any weak levels will also hold the power to destabilise markets.
Table 1: 2021 packaging recycling levels alongside confirmed carry in and current UK obligation
Figure 1.1: Q2 2021 unverified packaging recycling levels without carry over PRNs from December 2020 included
Figure 1.2: Q2 2021 unverified packaging recycling levels with carry over PRNs from December 2020 included
Paper – Paper appears to have had a strong quarter and is currently sitting ahead of its target at the halfway stage of the year, even when carry in figures aren’t taken into consideration. This strong progress ahead of target is historically common for Paper, with surplus PRNs at the end of the year often filling the majority of the extra ‘General Recycling’ obligation which the UK has to fill. However, it looks as though if current rates keep up for all materials, paper may be playing more of a supporting role this year.
Wood – It is likely the significant contributor to General Recycling would be Wood, if strong recycling rates continue. The Q2 recycling rate was slightly lower than what we saw in Q1, however the recycling target was actually lowered by 13% by DEFRA this year in anticipation of a conflicted and poor supply of waste wood packaging, which has not been reflected in practice. Supply has remained strong meaning that when carry in is included, Wood has almost hit it’s full annual recycling target, at the halfway point of the compliance year. We must remain cautious however as if pressure and PRN prices were to drop too much, then the incentive for suppliers to continue raising this evidence will also drop, so there is also a chance supply could reduce despite this impressive performance so far.
Glass – Throughout 2021, Glass has appeared to be the material which is tightest to the target, and this still remains the case with Q2 recycling data reflecting similar levels to Q1 at the moment. The figures are encouraging though because optimism in the industry surrounding a long summer with hot temperatures driving up glass recycling levels, seems to be occurring on the ground, and now also showing up in the recycling data as well. When viewed holistically across both glass types and including carry in from 2020 as well, Glass is sitting above target which is good, but we must continue to view this market closely as it is still close to its ‘par’ progress at this stage of the year.
Aluminium – Last year was a very strong year for Aluminium packaging reprocessing/exporting which resulted in a strong carry in and also the quarterly figures so far in 2021 have mirrored the strength of the data seen in 2020. Currently, Aluminium sits over 10% above its par progress for this stage of the year without carry in, which is improved even further when it is taken into account. This should continue to reduce market pressure, at least in the short term.
Steel – A very similar story to Aluminium, currently sitting ahead of the 50% mark without carry in figures included. Also, like Aluminium, the initial Q2 figure looks very similar to the strong Q1 levels, and in theory, any pressure in the market should also continue to reduce.
Plastic – Recently, plastic PRN prices and the market itself has been quite volatile due to many factors threatening to reduce plastic packaging recycling levels (such as the loss of Turkey as an export market and the EA’s new firmer stance on fraud and removal of PRN evidence). We can see in the Q2 figure that less packaging has been recycled in Q2 than Q1, however when viewed overall with the record carry in figure from last year too, we can see that Plastic is on course to hit it’s recycling target in 2021. It’s historically a volatile market so we must continue to track it closely, but the data release here has helped reassure all stakeholders that despite continued disruption/volatility, the UK does seem to be remaining on course to reach its goals.
This data release here is still ‘unverified’ which means the figures are subject to change by the Environment Agency, and it also means that there are still a number of both large scale and smaller scale reprocessors and exporters still to report their data. Usually this would mean that recycling levels will typically increase from this point, but as with last quarter, there have already been a few changes to this information, both up and down.
We plan to look at the data much closer to the ‘verified’ stage, as well as the market as usual and PRN pricing in our upcoming PRN Market Update webinar, which we are running on 17 August at 10am. 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 or the packaging team and we’ll be happy to help.