The most recent release of recycling data (22 October 2019) for Q3 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 the market experiencing sustained high price levels due to the threat of not reaching our annual targets. The Q3 data release has been highly anticipated, providing insights into UK recycling levels, the current/future PRN market and the task ahead of us as a nation as we move into the final quarter of the year.
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 in due course.
In 2019, the two materials under the most pressure in the PRN market have been Plastic and Aluminium. After the Q2 data release at the halfway point of the year, there were still question marks over both materials’ probability of actually reaching their material specific recycling targets for the year. This prolonged uncertainty has caused prices for both materials to reach record levels in 2019.
This being said, recent releases of unverified monthly data (especially for September), have demonstrated hints that these prolonged, high PRN prices may well have begun to be successful in terms of stimulating UK recycling levels. Today’s release of data for Q3 does show improvements in both Aluminium and Plastic, inspiring a touch more hope that the UK may well hit target come completion of Q4.
Table 1.1: UK recycling level by material for 2019, and tonnage required in Q4 to hit recycling target.
Figure 1.1: Recycling rates after Q3 2019, excluding carry in tonnages from December 2018
Figure 1.2: Recycling rates after Q2 2019, including carry in tonnages from December 2018
The data shows that Plastic has had its best quarter in terms of recycling levels and this means that without the carry in tonnages (rolled from December 2018), it sits on target at 75% and with carry in it surpasses target at 77%. This is very positive and encouraging as it effectively demonstrates that the PRN system has worked as designed and the higher PRN prices have in turn, increased recycling levels in the UK. However, the price levels taken to achieve this action have been unprecedented and much higher than ever before, for any material. Using a current UK obligation as well as levels achieved all year so far, it shows that in order to hit compliance by the end of the year we may well need to see levels of around 250,000 in order to achieve compliance.
This is good news but there is still a lot of work to be done in a notoriously volatile PRN market if the UK is to hit target and achieve compliance. Plastic remains a material to watch incredibly closely as we move towards the end of 2019.
Alongside Plastic, it has been Aluminium commanding the highest prices in the PRN market as after Q2 it sat behind target. As you can see from Table 1.1, Q3 has seen an improved level of recycling for Aluminium, however, when this is taken into account alongside the previous quarter’s levels and the UK obligation, we can see that a large amount of tonnes (roughly 28,000) are still required to be recycled in Q4 to hit target.
Much like Plastic, the Q3 results are very welcome and do offer positives, however, the levels required in Q4 to hit target still remain challenging, meaning price levels may well be sustained further.
Table 1.1 highlights that Steel has had a relatively poor quarter for recycling, and that rates have slowed of late meaning there has been small pressure increases within the Steel PRN market. It remains on track to hit its material specific target due to positive performances earlier in the year, however, it looks unlikely that many Steel tonnages will contribute to the UK’s ‘General Recycling’ in 2019.
When put into the overall picture for 2019, it seems a Q4 level of around 64,000 tonnes may well be required, which is achievable, but still demonstrates the need for continued recycling and therefore, Steel remains a material to watch as well as Plastic and Aluminium.
Much like Steel, in the earlier part of the year, Glass was seen as a potential candidate to chip into ‘General Recycling’ due to its strong performance, and Q3 levels also demonstrate another good performance. Due to levels of other materials, it may not contribute much, however, in terms of reaching its own material specific target it appears on track, hitting 77% without carry in and 81% with carry in.
After yet another impressive quarter, Wood has now already hit its material specific recycling target despite us only being at Q3. This shows that Wood is extremely likely to be filling a significant proportion of the extra ‘General Recycling’ obligation, meaning despite the very positive performance, pressure may well still remain in the PRN market due to the consistent demand.
Much like Wood, Paper is likely to fill a proportion of ‘General Recycling’. Without carry in, Paper almost hits its 2019 target at 95%, but this is reached if carry in is also considered.
To summarise, there are positive signs indicated by today’s data release which is very welcome in what has been a tough and unpredictable year on the road to reaching the UK’s recycling targets. However, as the data shows, despite the good news, there is still a task ahead for all materials meaning that they must continue to be monitored closely and we’ll continue to keep you up to date with figures and analysis. The data published today does remain ‘Unverified’ and we’ll update again in early November when this is verified by the Environment Agency.
Upcoming webinar and further resources
We are also holding another PRN webinar for members to provide a more detailed update on the data above, the PRN market itself and Comply Direct PRN prices. This is being held on Wednesday 27 November at 10am and you can register your free place here: https://register.gotowebinar.com/register/2603402043937769987
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 - firstname.lastname@example.org / email@example.com