The Q3 unverified recycling figures released by the Environment Agency indicate that whilst there has been some good recovery across some materials, glass and plastic remain at risk.
The table below shows estimated recycling evidence requirements for 2022. It also shows the carry over tonnage reported earlier in the year. Carry over is the amount of PRNs produced in December 2021 that are issued for 2022 use. The data shows that the total amount of carry over PRNs have fallen comparison to the previous year, apart from steel.
You will see from the table below that all materials are under performing against the recycling targets.
What does this mean for producers?
There has been some good recovery of recycling volumes in Q3 across some materials but there are still some at risk materials such as glass aggregate and plastic. When the carry out volumes are factored back into the in year supply most materials are achieving the minimum recycling target. There is a risk that any further slowdown to packaging waste being recovered and recycled in the final quarter of the compliance year will lead to significant increases to the cost of compliance for most materials but particularly plastic.
Glass - High risk
Glass recycling volumes in Q3 have significantly improved and the UK is back on track to meet the recycling target. There has been significant increase in glass remelt evidence although glass aggregate is still performing well below its target. This will mean that there is considerable pressure on glass remelt to over perform in the final quarter to ensure the overall target is met.
Plastic - High risk
Plastic recycling was not as positive as the market had hoped in Q3, especially as the market has seen consistently high PRN prices. The data is showing an increase in domestic reprocessing which is positive news for the industry overall but as we head into the final quarter the market will remain extremely volatile. PRN prices will need to continue to remain high to support the supply chain to ensure the recycling target is met this year.
Steel - Medium risk
Steel volumes in the last quarter have significantly dropped compared to the previous quarter. This is a concern for the market as we head into the final quarter. There will need to be strong support from the export market to ensure the recycling target is met. PRN prices will continue to remain high until we get sight of further monthly data.
Paper - Medium risk
Paper recycling has seen good recovery in Q3 and this was supported by higher PRN prices. There is still considerably pressure on paper to meet the general recycling target. Prices will need to remain high as OCC prices fall and demand for post-consumer packaging is falling due to an overall drop in consumer spending. Paper PRN prices will remain stable, the market will be reliant on the monthly data to ensure the UK is on track to meet the overall general recycling target.
Aluminium - Low risk
Aluminium is on track to meet and exceed its recycling target, the Q3 was another positive quarter for the market and is the only material where prices have softened. PRN prices will remain stable for the rest of the year.
Wood - Low risk
Wood is performing very well against its recycling target. There is additional pressure on ensuring volumes remain high for the rest of the year as wood is heavily relied on to meet the overall general recycling target. The PRN price will mirror the paper PRN prices as both materials will be used to meet general recycling.
Looking ahead
Ecosurety will continue to communicate the changes in the PRN market throughout the year. Whilst the three-quarter-year point is not positive, all PRN prices will increase to support the supply chain, this is required for stronger supply data in quarter four.
Ecosurety packaging members can access the interactive PRN market insights dashboard in the Ecosurety Hub website to follow the daily fluctuations in the PRN market per material and view year-to-date average market prices.
If you would like to speak with Ecosurety, please contact us on 0333 4330 370.
