The Environment Exchange’s (t2e) Andrew Letham overviews the latest developments in the PRN market.
The confirmed Q3 supply data released on 11 November shows that an additional 96,065 tonnes(t) of demand have been added to the obligation since Q2 from an additional 113 producers.
This increased demand has however been met by an excellent recycling performance with targets now looking very achievable for most materials and record returns in both Plastic and Aluminium giving cause for optimism.
There are currently 145 less producers registered than at close of play in 2018 so the potential remains for further growth in obligations before the compliance year concludes.
A record quarter in Plastic (303,639 tonnes(t)) means that based off the current obligation of 1,107,411t we are on course to meet target in year with the average monthly return of 92,697t just enough (2,200t) to see us over the line before the 23,009t carry-in is considered.
Caution must still be applied with potential for further growth in the obligation and concern more tonnage than can be afforded will be purchased for 2020 tightening up supply in the current compliance year.
Aluminium also produced a record quarter but remains in deficit in year with the 29,998t recycled putting us at 72% of target as we enter Q4.
Optimism remains that the high prices being experienced will continue to improve supply (which has increased quarter on quarter) and there will be enough in the tank come the end of the year however those holding out for a price reduction may not get their wish as prices increased £10 to a last traded price of £470 off the back the data.
Talk of issues in the Paper market again failed to manifest in a significant reduction in recycling rates. A healthy 943,970t were recycled in Q3 meaning an easy 145,921t (5%) are needed to complete the material specific Paper obligation (3,012,438t) and prices have fallen to a last traded price of £2.
Despite a slowing down in recycling steel is now expected to meet its target comfortably for 2019 and prices have fallen £22.50 (60%) since the initial release of the Q3 data.
A record recycling performance in Remelt (350,946t) means that total Glass recycling continues to track ahead of target with 77.25% of obligation complete as we enter Q4. Prices of both Remelt and Aggregate have softened since the release of the data falling 17% (£2.50) and 35% (£5) respectively.
A 158,967t recycling return, the largest this year, leaves us 108% complete on target with a quarter remaining. Prices which have held up well all year quickly adjusted to General Recycling levels (£3) and a significant amount of Wood PRNs will not now be able to find a home and will be written off.