Q3 packaging recycling data released by the EA.
As the last set of published data before the end of the compliance year, this publication is always eagerly awaited and even more so this year with so many materials still being quite tight in supply versus the demand obligation.
The data was released and was then amended over the subsequent month as some data from re-processors and exporters was submitted late.
Overall, up to the end of Q3, and with the carry in PRNs from 2014 taken into account, the packaging recycling data looks just about on track to hit target for most materials.
The only materials not to have reached the 75% target at this stage of the year are Glass Other (74%) and General Recovery (EfW) (53%) both of which can be made up by surplus other materials.
The data should be well received by Producers with Glass and Aluminium obligations. Aluminium has recovered well after the first two quarters of 2015 but still has some work to be done to meet target as it is bang on the 75% mark.
The shortfall on Glass Other is now easily being met by surplus Glass Re-melt and we should now see Glass prices soften a little over the next month or so. Aluminium PRN prices are likely to remain at a high rate for a few more weeks yet until buying demand is eased with the increased forecast supply continuing.
It was the Plastic data that was most eagerly awaited after months of fairly doom and gloom talk about the state of the UK Plastic reprocessing market and the dire lack of Chinese demand for UK waste plastic packaging.
The Q3 Plastic data is certainly down against the more positive Q2 figures but with the prolonged high Plastic PRNs prices (trading at between £60 and £70 on the back of the data) we should see improvements in the Q4 Plastic PRN supply.
The task ahead is still challenging and the Q4 Plastic tonnage will need to hit record high levels of approximately 215KT to ensure the UK meets target for 2015 on Plastic. Therefore no imminent significant reduction in Plastic prices on the horizon.
Please see below for an overview of all materials with carry in tonnages.
Q3 packaging recycling data: materials overview
With all eyes on Plastic due to the rise in PRN prices (click here for more information) over the past few months, it hasn’t performed too well with only 202,724 tonnes recycled in Q3 similar to 201KT in Q1 but down compared to the 220 KT in Q2.
There is a lot of work still to be done in Q4 but we should hopefully get across the finish line at year end. It appears a certainty that there will be very little carry in for 2016 and therefore next year could be a challenging year indeed for Plastic however, the current set targets are being addressed via the consultation.
Aluminium has met its quarterly target for the first time this year with a much improved tonnage for Q3 that has gone some way to repair the damage from Q1 and Q2. It now needs a strong Q4 and is likely to rely on the carry in from 2014 but leaving little carry in for the 2016 compliance year.
Glass Re-melt has had a very strong Q3 indeed and has more than made up for the shortfall of Glass Other. When added together, Glass should now comfortably meet its UK target obligation and also nicely set up 2016 with some significant carry in levels expected.
Paper & Wood
A strong quarter for both materials with both meeting their target and the surplus going towards General Recycling and General Recovery (EfW) obligations. Due to the surplus being used on General Recovery prices for both materials have increased throughout this quarter despite the strong recycling rates.
Steel is on track to hit target but with the UK Steel industry seemingly on its knees as we have seen in the national press of late and with the demand for scrap Steel being very low at present we may see a disappointing set of Q4 Steel tonnages.
Although we won’t be short of Steel PRNs for 2015 the likelihood is that we will have little carry in for 2016 and Steel PRN prices could be higher in 2016 than in 2015. We have already seen Steel PRNs rise lately and Steel is definitely one to watch in 2016!
Fulfilling the General Recycling obligation is not a forgone conclusion but Paper, Wood and now even Glass are all now doing well enough to contribute to this target. This is also applying additional pressure on Paper and Wood as these PRNs are being used in both General Recycling and General Recovery.
Due to more reprocessors becoming accredited and being able to include their tonnages within the data, we have seen an increase in all tonnages from Q1 - Q3, however, EfW is still below target for the year. Based on the current trend, we would expect to see a large Q4 but still nowhere near enough to make up the deficit from earlier in the year.
If you have any questions about the Q3 packaging data, please do not hesitate to get in touch with a member of the packaging team.