The Q3 unverified recycling figures released by the Environment Agency indicate that whilst recycling targets for all materials are currently on track, glass remains a concern.
The table below shows estimated gross requirements for 2021 and also the carry-in tonnage reported earlier in the year. Carry-in is the amount of PRNs produced in December 2020 that are issued for 2021 use, helping to reduce the 2021 obligation.
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?
Glass remelt has been tracking behind its recycling target all year and Q3 was no exception. Glass remelt has used all the carry in PRNs to achieve 77% recycling against its target by the end of Q3 and PRN prices will rise exponentially as we enter the final quarter of the compliance year.
Whilst there is a low risk of non-compliance, the financial risk will be significant. Glass aggregate has been performing well against the target all year, there is little risk of volumes diminishing in the final quarter of the year.
Plastic has performed well against its recycling target this year, despite the uncertainties caused by the economic markets. The Q3 data shows that the UK is on track to meet compliance this year, however we are seeing a reduction in plastic recycling quarter by quarter.
Prices are likely to hold because of the data and we are forecasting a slightly lower Q4 than Q3. Whilst we will achieve compliance, the carry out volume from 2021 into 2022 may reduce which is likely to put pressure on the market next year.
Paper recycling has remained solid during the first three quarters of the year. Paper is another material that has seen a reduction in recycling quarter by quarter, this is mainly due to the low PRN prices and some recyclers choosing not to issue PRNs.
The paper carry out is forecasted to remain strong, the main risk with paper is that recyclers choose not to re-accredit due to low PRN prices.
Another positive quarter for aluminium recycling. The data suggests that aluminium may have already met its recycling target this year and all excess PRNs can be used to meet general recycling.
It is forecasted that there will be a positive carry out of PRNs from 2021 into 2022 which will help towards the target next year.
Steel recycling has remained strong all year and last quarter was no exception. Steel PRN prices have fallen, and the market is forecasting a strong carry out of PRNs.
The main risk to the steel recycling target for 2022 is the increasing energy costs, and it may be that PRN support will be needed to ensure the target is achieved.
Wood has achieved its recycling target this year and all excess PRNs will be used to meet the general recycling target. Similarly to paper, should prices remain below administrative values there is a risk that recyclers will no longer choose to accredit for next year.
We will continue to communicate the changes in the PRN market throughout the year. Ecosurety packaging members can also access the PRN market tracker that provides a daily update on market pricing trends and performance by clicking here.
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.
Group procurement manager
Sandeep works in the role of Group procurement manager. Sandeep builds and maintains strategic relationships with our key service partners for packaging, batteries and WEEE, whilst creating new relationships and initiatives to improve UK recycling. Sandeep has over 17 years’ experience of the regulations and understands the challenges and opportunities that can arise from volatile markets.