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PRN Monthly Update: A Turbulent 12 Months for the PRN Market

The last 12 months has been turbulent for the PRN market, and whilst production for many PRN grades has been on target, prices have remained high through much of the year.

There are several key reasons for this and these issues are likely to continue to impact the UK markets in the short and medium-term:

• China has been one of the UK’s primary recycling resources for many years. Following its widely publicised embargo on most streams of UK plastic waste, other export markets emerged. However, some of these are already saturated and there is growing concern about how the UK will cope in 2019 without the resource of Chinese recycling.

• The UK’s recycling targets have increased again this year. Defra did consider whether targets should be mediated for 2019, but its decision was to keep with the planned increases. There is awareness politically that higher targets will increase pressure on the recycling industry, and therefore increase prices, however the view is that these targets are necessary to increase recycling rates.

• Both the consultation on the future of packaging regulation that will formulate policy following the government’s Waste and Resources Strategy, and the political turmoil over our exit from the EU, have caused the recycling industry to think short-term, making it difficult to firmly estimate PRN production for 2019.

The Environment Agency released its final monthly data on PRN production for 2018 in January, which covers the month of December. January is the final month available to those producers still looking to source PRNs to complete their certificates of compliance for the 2018 packaging compliance year. December data is therefore the last insight into how the UK has performed against overall recycling targets.

Production across many grades was positive in December. The high costs across all PRN grades seem to have increased the rates of recycling and recovery, helping the UK meet its recycling obligation for 2018. Paper, aluminium and steel have comfortably achieved their obligations for the 2018 compliance year.

Our December update highlighted that both glass and plastic were the key grades to watch during quarter 4. The interim figures reported that a total of 1,687,485 tonnes of glass PRNs have been produced in 2018, which means the grade will comfortably achieve its annual target with the PRNs carried over from 2017. Total glass production in December was reported at over 225,000 tonnes (150,000 tonnes of remelt, 75,000 tonnes of aggregate), the strongest production month for glass in 2018.

There has been a similar story with the price of Plastic PRNs in the last quarter of 2018, rising to their highest value in a number of years. In December, just over 93,500 tonnes of plastic PRNs were reported as being reprocessed or exported, which is a total of 1,002,000 tonnes of plastic produced for the 2018 compliance year. This figure suggests we are 70,000 tonnes short of the overall plastic target for 2018.

Wood is another grade that remained in the spotlight through much of 2018, with questions over whether the target for wood PRN’s would be met. However, the figures show a PRN market doing the job it was designed to do, by utilising a higher price PRN to subsidise the costs of recycling overheads and therefore encouraging recycling.

Sam Caplen, Business Development Executive at Clarity Environmental, said: “By design, the money generated by PRN’s should be used to increase reprocessing and export to meet the UK obligation. This seems to have been the case for wood PRNs this year, with a further 46,750 reported in the December figures. Over 425,000 tonnes of wood PRNs have been generated in 2018, which is around 50,000 tonnes more than the previous year.”

Exporters and reprocessors are not obligated to report in the monthly data so we would expect to see the total PRN production for the year across most PRN grades increase further on the figures when the official quarter 4 figures are released in February.

Clarity has been buying and selling packaging recovery notes (PRNs) since our business started in 2002. We are now one of the largest and most experienced open market traders of PRNs. To talk to our team about buying or selling any grade of packaging recovery note (PRN), contact us on 0845 129 7177.

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