The Environment Exchange’s (t2e) Andrew Letham provides an analysis for the PRN market Q1, saying 2019 looks set to be equally if not more challenging than 2018 with target increases across all materials.
Following a remarkable 2018 in the PRN market, 2019 looks set to be equally if not more challenging. Target increases across all materials come at a time and when export destinations are either closing their doors entirely to certain grades of material or implementing stricter policing policies at
At home the four agencies seem to have acknowledged the need for greater regulation in some materials, tightening up the accreditation process and increasing inspections of both operators’ sites and outbound cargo at dockside.
Based off an estimated recycling obligation of 7,615,488 tonnes(t) we will need to find an additional 130,000t of supply in 2019 to meet recycling targets in year as packaging handled, and targets increase. To highlight the difficulty in achieving this, growth from 2017-2018 was a mere 16,870t.
Material specific carry-in has also fallen by 122,830t on 2018 meaning that we start the year in a worse position than last with the most notable decreases in Paper (86,083t) and Plastic(50,341t).
With high PRN prices largely carrying over and, in some cases significantly increasing on 2018 it was hoped that the Q1 data released on
The table below looks at the Q1 supply data against an estimated obligation (
For the first time since 2004 Plastic recycling was down year on year in 2018. Target was missed in
With fears of a supply shortage continuing into 2019 prices have remained high and continued to escalate. Limited licenses have been issued to Malaysia and Indonesia, China is all but dead and Vietnam is unavailable due to shipping issues.
This comes on top of and much greater scrutiny being placed on exports that do leave the country meaning the UK’s ability to move lower grade plastics on which a large number of PRNs were generated has been seriously diminished.
The Q1 result reflected this with the 241,447t reported as recycled way short of the estimated 280,000t we will need each quarter to meet
More licenses have now been issued to Malaysia and Indonesia and the agency
However, it seems to be
Paper recorded a relatively strong Q1 which goes slightly against some of the difficulties being reported in the market. The 929,457t reported will (as always) easily be enough to meet the material specific target but will fall slightly short of fulfilling the full general obligation and will require help from other materials.
Prices had been trending upwards from the start of the year however have softened slightly in recent weeks and may well soften further off the back of this data.
Following A hugely difficult 2018 the PRN system again seems to have done its job and pulled more supply into the market. The 153,631t reported is the largest return since Q2 of 2011 and at current levels would mean a significant oversupply in year.
Prices have softened since the beginning of the year due to the significant availability and will likely settle closer to the general (paper) price.
High Glass prices seem to have made Aggregate viable again with the 123,089t recycled in Q1 45% higher than the 2018 average of 85,326t. overall the 443,539t reported in Q1 suggest a healthy market especially considering the near 70,000t carry-in.
Glass reprocessors have suggested that the high prices seen early in the year had diverted some potential Remelt tonnage to aggregate however this may be short lived if prices continue to soften.
Steel continues in very steady supply as question remarks remain over the obligation. Packaging handled fell by almost 7,000t between 2017 and 2018 however a 3% target increase will likely mean a slight upturn in obligation.
102,916t were recycled in Q1 which if continued will be enough to meet target in year with a small contribution to general recycling. Prices will likely track slightly above paper to ensure there is enough in the pot for the material specific obligation.
The Q1 return of 21,841 gives cause for concern in Aluminum especially if the downturn in steel obligation is because of producers switching material. A 3% target increase will ensure that the obligation sits close to 100,000t and therefore 25,000t will be required each quarter to meet
Prices jumped 17.5% off the back of the data as supply remains thin on the ground and given trading activity in 2018 you would have to expect they have
Overall a relatively strong Q1 supply with the exception of Plastic and Aluminum. General recycling looks to be in
Aluminum has the ability to deliver the numbers required as shown in Q3 of 2018 when 28,104t were recycled however as with all materials much depends on the confirmed obligation figures released 15th May.