Final 2019 packaging data published

11 FEBRUARY 2020

The EA has published the final monthly data for 2019. Whilst not yet the final verified figure nor the data that shows the split of UK reprocessing and exports, it does provide the basis for some useful analysis.

If you compare the recycling figures to the net 2019 demand ie the total obligation less the carry forward PRNs taken from December 2018 into 2019, then the '2019 surplus' column in the table indicates the level of potential carry forward from December 2019 into 2020. Given that some of this might not be available, I have scaled back those numbers slightly to estimate the carry forward which can be seen in most cases to be considerably higher that the 2018 carry forward levels. 

The 2020 obligation has been estimated by applying the 2020 targets to the 2019 final obligated data report. This assumes that packaging placed on the market in 2019 was broadly similar to that placed on the market in 2018. Given that apart from aluminium, the 2018 POM figure (reported in 2019) was fairly flat compared to 2017 (reported in 2018), it would seem reasonable to assume that packaging use in the UK has plateaued although we won't know this until May when the reported obligated data for 2020 is first published.

If the potential 2019 carry forward is then deducted from the predicted 2020 obligation to provide the estimated net PRN demand for 2020, it can be seen that the 2019 recycling levels meet those net demand figures.

This would suggest that with no hiccups, the 2020 targets will be easily achievable. But of course, no year is without some sort of hiccups and 2020 is likely to have its share. 

The Government has been talking about banning the export of 'polluting' plastic waste to non-OECD countries and the Environment Bill will give them the powers to do that. The pie charts below show the split of plastic exports and then the destination countries for the 693k tonnes of plastic packaging that was exported in 2019. Whilst the non-OECD countries might be perceived as the risk, many might say that some of the OECD countries are probably a bigger risk and when you look at our dependence on Turkey, for instance, if they should tighten their import controls, there could be problems.

There has been widespread concern over tightening export markets for paper as well. We exported 68% of paper packaging for recycling in 2019, so any export problems will have a significant impact. And of course, as Brexit looms at the end of the year, the current talk of tighter export controls could slow down flows.

One good aspect of the data - combining it with other available data - is the increase we are seeing in UK plastic reprocessing. Although a long way off offsetting exports to the extent required, the table below shows that 2019 saw significant progress.

PRN prices last year saw producers paying vastly more then in previous years. How much of those price increases was down to hype, to market manipulation or just to the PRN system working as it should to ensure sufficient material got recycled is impossible to tell. But at this stage, it seems difficult to justify some of the high prices that are still being paid given that compared to previous years when the general supply/demand balance has not been dissimilar, prices have been much much lower.

One thing is for sure though, 2020 PRN prices are as unpredictable as ever and there is no doubt that it will be another volatile year.