The most recent release of recycling data (22 July 2019) for Q2 2019 from the Environment Agency is now available, which details the progress made by the UK against its recycling targets for the year. So far throughout 2019, the PRN market for certain materials has proven to be extremely volatile with some alarming price rises occurring over the previous three months. The Q2 data release has been widely anticipated, providing vital insights into UK recycling levels, the current PRN market climate and where this leaves us as a nation as we move into Q3.
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.
After the final verified Q1 data was released back in April, it showed that paper, wood, steel and glass made great progress against their respective targets despite the early stage of the year. However, the data also showed that there were strains on both Plastic and Aluminium which in turn had started to accelerate price rises for these materials within the market. Since the release of this Q1 recycling data, prices for these troubled materials have continued to rise with Plastic prices reaching heights of around £450 per tonne and Aluminium up to roughly £275 per tonne.
The rapid price rises caused multiple stakeholders from within the sector to highlight their concerns over the prices and that the UK appears to be struggling to hit its annual recycling target for both plastic and aluminium. The EA and DEFRA responded with an early data release which implied that we could potentially expect strong levels from the Q2 Recycling data which may help us get back on track towards target.
Figure 1.1: Recycling rates after Q2 2019, excluding carry in tonnages from December 2018
Figure 1.2: Recycling rates after Q2 2019, excluding carry in tonnages from December 2018
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 Q2 recycling data both with and without carry in tonnages taken into consideration.
Plastic – The EA and DEFRA were correct that Q2 has seen an improved quarter for plastic recycling. However, the recycling figures aren’t as high as many expected and even with a prolonged period of high prices and incentivised reprocessing and exporting, the UK still only sits at 49% of the overall annual target for Plastic at the halfway stage.
When carry in PRNs are taken into account, plastic does sneak ahead of target to 52%. The data suggests that for the UK to stand any chance of meeting its recycling targets, these increased recycling levels will have to be sustained for the following two quarters. Therefore, it’s likely that the current climate of price volatility and generally high price per tonne levels are expected to continue into Q3 and Q4.
Aluminium – Similar to plastic, aluminium still remains behind target at the Q2 stage when carry in levels are discounted. Without carry in tonnages aluminium peaks at 47% and with the additional carry in, 50% is only just met. Problems within aluminium such as the disparity between the packaging recycling occurring and the PRN evidence being raised/issued, as well as a reliance on exports have continued to mount pressure in the market. From the Q2 data, it suggests the UK is still facing problems within these materials and much like Plastic, high price levels and volatility looks likely to continue in the near future.
Paper – It has been another strong quarter from paper where we have seen it reach 65% of its material specific recycling target (without carry in). This is despite us only reaching the halfway stage. If strong paper recycling levels continue, it seems as though surplus PRNs from this material may well be helping to contribute to the UK hitting its ‘General Recycling’ target. The more positive material recycling levels compared to plastic or aluminium should help fortify the current paper market. This will hopefully promote the current stability levels with the possibility of prices softening in the coming weeks.
Wood – Wood had a standout quarter with really strong recycling levels and has now reached 72% of its material specific recycling target. Much like paper, it looks likely it will also be contributing towards ‘General Recycling’ towards the end of the year and for the near future we can hopefully expect stable prices.
Glass – Glass remelt had another strong quarter and despite a strong Q1, glass other has seen a decreased amount for Q2. When combined overall, we can see that without carry in considered, total glass recycling levels sit above target at 54%. It’s unlikely as many glass PRNs will be used to help fill General Recycling as paper or wood, however, if the strong performance continues, this may well become more of a possibility in Q4.
Steel – Another material which has seen good levels of recycling over both Q1 and Q2 is Steel. This means that it too is looking likely to be in the mix to help contribute to General Recycling in 2019 and much like the other materials expected to be filling General Recycling (paper, wood glass), a stable PRN market is expected.
To summarise, it appears the trends analysed in Q1 have continued, with the General PRN market heading in two different directions. Good solid recycling levels for paper, wood, steel and glass leading to a stable market and lower prices than the alternative route of plastic and aluminium which are behind target. Not only are they behind target but materials such as Plastic are now under the public microscope so it very much remains the material to watch.
We are holding another PRN webinar to provide a more detailed update on the data above, the PRN market itself and Comply Direct PRN prices, on the 25th July 2019 and you can register for your free place here: https://register.gotowebinar.com/register/4050407722304778499.
As usual, we will be recording the webinar and once complete, If you wish to access this recording and the 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 personal account manager directly, myself (Ash Clay) or Sarah our Commercial Director - email@example.com / firstname.lastname@example.org