Last week (22 October 2022) saw the initial release of the Q3 unverified quarterly packaging recycling data, outlining total amounts of packaging volume to have been reprocessed or exported in Q3 2022.
Quarterly data releases are incredibly important for several reasons. It displays packaging recycling levels achieved up to Q3 and therefore highlights how much recycling is still required in the final quarter of the year for the UK to hit its government set recycling targets. The data can also be a valuable insight into how PRN markets may begin in 2023, based upon how achievable and realistic the remaining requirements are for this year.
Solid recycling levels seen in this initial data set will have the potential to soften pressure and further stabilise current PRN markets, and likewise any weaker levels will also hold the power to destabilise markets.
Table 1.1: 2022 unverified packaging recycling levels alongside carry in and current UK obligation
Table 1.2: 2022 unverified packaging recycling levels required to reach final targets based on current UK obligation
Figure 1.1: Q3 2022 unverified packaging recycling levels without carry over PRNs from December 2021 included
Figure 1.2: Q3 2022 unverified packaging recycling levels without carry over PRNs from December 2021 included
Paper, wood & general recycling
Paper appears to have had its strongest quarter of the year so far and has managed to remain on track to hit its own material specific target at this stage in the year. It has been a tough year so far with Q1 and Q2 levels reduced in comparison to previous years, driven by ever evolving factors such as a wavering demand for recycled paper pulp and ongoing export issues. However, Q3 demonstrates encouraging signs that paper can hit its own target in 2022 as we move into the final quarter of the year.
Wood has now officially reached its own material target for 2022, even without considering any ‘carry in’ from December 2021. This means that when the UK is purchasing PRNs to fulfil its ‘general recycling’ obligation (which can be filled by any material PRN), it is very likely that wood will be utilised for this purpose, with little input from paper as its recycling rates are relatively weaker. A continuation of strong recycling rates of wood is essential if the UK is to reach its general recycling target in 2022, which is maintaining market pressure across both materials at present.
As with the previous two data releases, glass remains one of the materials that is tightest to its recycling target. Despite Q3 levels for both glass other (or glass aggregate) and glass remelt being their strongest of the year so far, glass other is still significantly behind its individual recycling target. This means that despite glass re-melt’s recent improvements, pressure in the market and high price levels will remain to reflect this deficit, as either grade will now be bought with a view to fulfilling the UK’s overall glass target. Reaching the final target without use of the small available ‘carry in’ from 2021 appears much more achievable than in recent months, if these positive recycling rates stimulated by sustained high price levels can be maintained.
Aluminium performed well in Q3 with a slight improvement on Q2 as outlined in table 1.1. This means that aluminium currently sits above its respective recycling target at this stage of the year, even without ‘carry in’ considered. The improvement this quarter is encouraging given recent high PRN prices and we are now starting to see market pressure reduce. As with glass, despite encouraging data, a strong Q4 will still be required with current recycling rates maintained, if the UK is to reach its final target.
Steel had an underwhelmingly average quarter as it slipped behind its government set recycling target with ‘carry in’ from December 2021 not considered. Due to the current poor recycling levels so far this year, it means that if recycling rates don’t improve, it is very likely ‘carry in’ tonnages from December 2021 may have to be utilised to reach the target. This is completely acceptable and will help the UK achieve compliance in 2022 however, it would mean there would be less steel PRNs available to roll over into 2023. This would increase the likelihood of a higher-pressure market at the start of next year, with subsequently higher prices. Market pressure has risen sharply in response to the data release, which will hopefully stimulate recycling rates between now and the end of the year.
Plastic has remained behind its recycling target at the past two quarterly stages and this remains the case after Q3. As you can see from figure 1.1, without ‘carry in’ considered it remains behind at 73% progress towards its final target, this progress is boosted when considering the ‘carry in’. As with steel, unless recycling rates don’t improve, it is very likely ‘carry in’ tonnages from December 2021 will have to be utilised to reach the target, and like steel, PRN prices have risen sharply in response. 2022 compliance remains achievable, however PRN markets and prices will now remain under high pressure until the end of the year and into the start of 2023 if large portions of ‘carry in’ are having to be utilised as well.
Overall, the initial release of this data has illustrated some improvements and a more positive outlook on the UK being able to reach compliance this year. However, pressure has increased in already high-level markets, such as plastic and steel. Even with other markets improving they still require a strong finish to 2022 to get the job done.
This data release is still ‘unverified’ which means the figures are subject to change by the Environment Agency. There are also still several 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, however with past releases there have been fluctuations with this information, therefore we will monitor this situation closely.
It is also worth noting that there are still a handful of large UK packaging producers to submit their packaging data to the Environment Agency for 2022. This means the UK obligation is still likely to increase, which will reduce the progress of the recycling levels we see here towards their final target. This is also adding to the pressure on a number of markets, even despite some having a positive Q3.
FREE Webinar: PRN Market Update (Members Only) – Thursday 17th November 10-10:45am.
In this upcoming webinar for packaging members, we plan to look at the data much closer to the ‘verified’ stage as well as discussing the current market and PRN pricing.
We highly recommend that packaging members register and attend this webinar as it will be extremely useful in outlining your remaining costs for 2023, whilst also helping you to prepare and start to budget for 2023. If you cannot attend on this day, you can still register as you will receive the slides and recording the day after the webinar to view in your own time.
Register your free place HERE.
If you have any questions at all, please do not hesitate to get in touch with your account manager or the packaging team at firstname.lastname@example.org / 01756 794 951.