All materials on track to meet annual obligation

The provisional 2020 packaging data for Q2 was released by the Environment Agency on the NPWD on Wednesday 22 July 2020, detailing how much packaging waste has been recycled or exported between April and June this year.

Although the data is not yet final, it provides an important insight into the recycling performance halfway through the compliance year. With the country in lockdown for much of the second quarter, this data release was widely anticipated, with many keen to review the impact of any difficulties being faced by the industry as a result of the covid-19 pandemic and the capacity for the industry to deal with any potential reduced recycling later in the year.

Overall, the provisional data provides a very positive outlook for the first half of the year. The data is particularly strong when carry over from 2019 is taken into account. If the performance of production is maintained through the second half of the year, the UK will be well on track to meet its 2020 targets across all materials. Plastic and aluminium are reporting particularly positive production halfway through the year, having already reached 62 and 69 per cent of their annual production targets respectively (with carry over). In anticipation of the data release, packaging recovery note (PRN) prices for both materials had already experienced a softening. There are, however, concerns that the lower price of plastic is making the correct and proper treatment and export of the material more difficult. Both industry and authorities will need to carefully monitor over the next few months to ensure that genuine, high quality, plastic waste exports can still be achieved with a lower PRN subsidy.

We could now see a response in the cost of steel PRNs, which has seen some elevated prices during the quarter and is now at 64.5% of its annual target including carry over. Paper and wood are two materials to watch, having both reported significantly lower production figures when compared with the same period last year. Although both remain above target, these two materials have historically been relied upon to help fill General Recycling.

Martin Trigg-Knight, Head of Packaging at Clarity Environmental, said: “The interim Q2 data is very strong as was expected, with good production reported across all grades. Obligated producers, in particular, will welcome this continued progress towards the annual targets following such a volatile year for prices in 2019″. Martin continued that although the figures were encouraging, the industry could still face challenges from the impact of the coronavirus pandemic and a possible recession.”

“If production continues at these levels across the board, the UK will be well on the way to achieving targets for 2020. And whilst we must remain cautious over the impact of a recession on the industry, and possible further lockdown measures these latest figures go some way to provide confidence that any reduction in tonnage later in the year can be moderated in part by a positive first half of the year.”

It is important to note that the Q2 data is unverified until 10 August and, with a number of companies still to submit their data for the quarter, the figures could change in the coming weeks.

PRN Material Overview

Wood

Wood continues to show a drop from last year in Q2, with the supply of waste significantly lower as a result of the closure of construction sites. The grade has achieved over 60% of its estimated obligation with carry over, however as with paper, wood is also traditionally needed to help fill the general recycling obligation

Glass

At 55.5% of its obligation with carry over, glass is tighter to its annual target than some other grades. This is to be expected, with the impacts of lockdown hitting the hospitality sector hard. Q2 data does, however, show an increase of 42,000 tonnes of total glass from the previous quarter.

Steel

At 64.5% of its estimated obligation with carry over, steel is currently making very good progress and showing a marginal increase in performance from Q2 last year. We could now see a response in the PRN prices of steel, which has seen some elevated prices during the quarter

Aluminium

With last year’s elevated prices encouraging production, aluminium has had a particularly positive first half of the year, achieving 64% of its overall estimated obligation without carry over and rising from 27,093 tonnes in Q2 2019
to 40,653 in Q2 2020.

Plastic

A positive start to the year for plastic, following a volatile year in 2019. Q2 has seen an increase of over 34,000 tonnes from the same quarter in 2019. Plastic currently sits at 62% of its overall estimated obligation with carry over.

Paper

This grade sits above target for its obligation, but paper production is down from 963,742 in Q1 2019 to 803,186 this year. With paper needed to help fill the general recycling obligation, this is one material to watch.