Q2 data verification raises question about plastic PRN prices

11 AUGUST 2017

When the unverified Q2 data was published on 22 July, eyebrows were raised at the amount of UK plastic recycling which had risen substantially since Q1. The EA has now published the verified data thereby confirming the levels that had been previously published as being correct. 

This means that with Q1 recycling, the UK reached nearly 54% of the total 2017 plastic obligation and needs an average of 219k tonnes of recycling in Quarters 3 and 4, 30k tonnes less than was achieved in Q2.

Normally, the market would react quite quickly to this sort of data and PRN prices would fall, but that is not happening. Indeed, after an initial small fall, the prices have risen again, so what is causing this contradiction?

Also published yesterday was the quarterly breakdown of Q2. If that had shown a month on month decline, that might have raised fears that Q3 was starting from a low position, but as the graph below shows, June produced the highest tonnes in the quarter.

Recent announcements on potential waste import restrictions by China have caused concern, but the general view appears to be that whilst this might have a significant impact in future years, it is unlikely to see a big impact in 2017. And as Q2 showed, UK reprocessing appears to be able to increase recycling levels to compensate.

67% of available PRNs were issued by the end of Q2, a similar amount to the same period in 2016, so it does not seem as though operators are holding them back and one can only assume that they continue to command the high price because of a perception that exports are in a worse position than they are.

It will be interesting to see how the rest of the year develops.