The interim Q2 recycling figures released by the Environment Agency show a very positive start to the year, with all materials performing well.
The table below shows estimated gross and net requirements for 2020. It also shows the carry-in tonnage reported earlier in the month, which is the amount of PRNs produced in December 2019 that are issued for 2020 use. The total amount of carry-in PRNs has increased in comparison to the previous year, particularly in paper, aluminium and steel.
You will see from the table below that all materials are performing well against the recycling targets, showing a surplus in all materials:
What does the data mean for producers?
Following the release of the Q1 packaging recycling data there was scepticism within the industry that we would see similar tonnages reported for Q2 as the UK was placed under lockdown. The recently released Q2 packaging recycling data shows there was little impact to the recovery and recycling of glass, aluminium, steel and plastic post-consumer packaging. Paper reported a 10% reduction in volume against Q1, although at this stage this reduction does not pose a risk of non-compliance.
Glass has performed exceptionally well for the first half of the year, showing a current surplus of 2%. There were concerns at the beginning of Q2 that we would see a reduction in glass remelt supply and an increase in aggregate due to the shutdown of the entire hospitality sector.
The data shows there has been a significant increase in aggregate and a steady supply of remelt PRNs, which has led to a strong performance in Q2.
Plastic recycling has remained unaffected by the restrictions imposed during lockdown and the UK has achieved 57% recycling at half year point. There have been a number of concerns raised by industry that the Q2 data seems a little high considering the downturn seen by the majority of the UK reprocessors in Q2.
The other factor which is also contributing to the oversupply is the UK demand has fallen against last year, despite a target increase. We believe volatility will remain for the rest of the year in plastic - as prices soften so will supply.
There was always a short-term risk that there was going to be a slowdown of post-consumer packaging in the commercial and industrial waste stream when lockdown was imposed.
The Q2 data was disappointing but as businesses come out of lockdown and restrictions in some sectors are lifted, we should see some recovery in Q3.
The wood sector was hit the hardest during lockdown with HWRC’s closed and the constructions sector grinding to a halt, there was always a risk that Q2 recycling was going to be affected.
The data suggests that we are beginning to see this market recover and expect recycling targets to resume in Q3 to pre-COVID levels.
There are no immediate concerns with achieving the steel recycling target this year, although there was a slight impact during April and May when the country was placed into lockdown.
A few of the large scrap steel merchants closed for two weeks which put pressure on the supply of steel PRNs. The Q2 data is very positive however, and we expect recycling to continue to perform at the current levels.
Despite the issue with supply encountered in 2019, aluminium is performing exceptionally well this year. The increase in recycling per quarter is mainly contributed to by the increase in incinerator bottom ash recovery.
There is a risk that if aluminium continues to overachieve, the supply of PRNs generated in Q4 will be used for general recycling.
Ecosurety will continue to communicate the changes in the PRN market throughout the year. As supply is looking fairly strong for the first half of 2020, there is very minimal risk that compliance will not be met this year.
If you would like to speak to a member of the Ecosurety team about the impact of compliance on your business, please contact us on 0333 4330 370.
Sandeep joined the procurement team in April 2019 and works in the role of procurement manager. Sandeep builds and maintains strategic relationships with our key service partners, whilst creating new relationships and initiatives to improve UK recycling.