Packaging Recovery Notes (PRNs) and Packaging Export Recovery Notes (PERNs) are sold on an open market, meaning that prices can fluctuate according to supply and demand and market perceptions as well as economic, social and political variables.
With 2022 being a largely unprecedented year for the PRN market- pricing at record highs and a tight end to the compliance year ahead, Clarity outlines the main factors affecting the market.
Like almost all markets and industries in Europe, international instability and the energy crisis has had a significant impact on the PRN market and the recycling industry as a whole. With post- Brexit teething troubles, the Ukraine conflict and sharply rising costs across the entire supply chain, it is safe to say that these factors have made a huge difference to the price and availability of PRNs and PERNs.
As the energy crisis ploughed on throughout the year and business overheads steadily increasing, the amount of reprocessed material was reduced, yet prices continued to rise. Historically when PRN prices have been high, more material gets recycled as the higher prices stimulate the market. However, due to the cost of reprocessing, this largely hasn’t happened.
As well as major haulier strikes in Spain at the beginning of the year, port workers in Felixstowe and Liverpool began striking in September and October over issues with pay. The industrial action continued for around 3 weeks and caused materials to be waiting at the port ready for export. This had an overall negative impact on the price of PERNs as less were able to be generated with materials sitting at the ports. The strike has now been resolved with the workers achieving a 9% pay increase, we expect to see this being a much lesser problem in the upcoming year.
China have also been going into planned lockdowns throughout the year due to the COVID- 19 pandemic, causing issues with shipping container availability. With much less materials coming into the UK, there were many more issues with getting material out due to a lack of containers to export materials effectively. This meant that, again, material was waiting at the docks to be exported but having to sit at the port until a shipping container becomes available.
The recycling obligation for each year is set off the back of the year previously. For 2022, the obligation was based on the amount of packaging placed on the UK market during 2021. However, due to much of 2021 being spent in national lockdowns, consumer buying behaviour has significantly changed.
Due to the change in behaviour, the industry is seeing many more issues with availability of material than ever. With consumers out of lockdown, buying less products wrapped in less packaging and an obligation set from last year’s data, there has been issues with availability of materials to meet the target. This could cause some businesses to be non- compliant with UK packaging regulations, meaning that demand is high, naturally driving the price of PRNs up.
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