The final Q2 packaging recycling and recovery data has been published by the Environment Agency, providing us with a half year position against the forecast UK obligation.
The data provides some certainty of the UK achieving compliance in a number of materials, but plastic and aluminium remain a concern with PRN market prices reacting accordingly. The table below presents the recently released data:
The first column in the above table shows the ‘Forecast 2019 total requirements’, the amount of PRNs required to meet compliance in 2019. Importantly this is a forecast as not all producers have registered yet, meaning the precise total requirement for the year is not yet known.
‘2018 carry over’ in the second column details the amount of PRNs generated in 2018 that were assigned to the 2019 compliance year. These can therefore be subtracted from the 2019 total requirements to give us the net requirements for 2019, shown in the third column. These are the amounts we actually need to achieve this year.
By dividing the net requirements by four we obtain the ‘Forecast 2019 quarterly requirements’, a useful benchmark of whether or not we are on track as we progress through the year and quarterly data is released.
What does the data mean for producers?
Here we take a look at each material to see how the most recent data impacts producers:
Aluminium has seen a slight increase in Q2 but currently has the biggest shortfall of all materials compared to where it should be by mid-year, underperforming by 4% (over 4,700 tonnes). There is concern about meeting the recycling target and PRN prices are increasing quite rapidly to current highs of over £330.
Like aluminium, plastic witnessed an increase in Q2 but is still underperforming by 2% (over 20,000 tonnes) at this point in the year.
The material remains high risk and despite PRN prices falling back down to under £180 from an unprecedented high of more than £460 in June, we have seen prices increase quite rapidly again.
Glass has performed well in the first half of 2019, and we are on target to achieve compliance in this material. However, caution is required as glass processing has slightly fallen since Q1. If this trend continues for the remainder of the year, there is a small risk that Q3 and Q4 would see PRN prices that have steadily fallen all year increase to meet demand.
Paper is performing very well with over two thirds of the requirement met at half-year point. We foresee no problems with this materials and PRN prices have fallen since the end of June.
Wood is the best performing material and has achieved over three quarters of the annual requirement by the mid-point of the year. We foresee no problems here and PRN prices have been on a significant downward trend since the beginning of the year.
Recovery is again well on track at half year point and we foresee no problems on the horizon.
Ecosurety will continue to communicate the changes in the PRN market throughout the year and the impact on producers. 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.