European Environment & Packaging News, November 9 2011

The UK's latest reprocessing and export figures were not as good as those for quarter two, the Environment Agency revealed at the end of last month when announcing its Quarter 3 (Q3) figures for packaging recovery notes and packaging recovery notes for export (PRNs and PERNs).

However, the industry is still on course to meet its business targets for recycling and recovery, according to the UK's trading platform, the Environment Exchange (t2e), that traded its first recovered paper contract at the end of last month (see next article). Some 940,427 tonnes of waste were accepted for recycling and 1,099,871 for recovery (with some reprocessors and exporters still to submit their quarterly returns so the data is subject to further changes).

“The figures show that the UK is on track to meet its packaging recycling targets,” t2e's Patricia Hall told EE&PL. ”However, the plastic market remains tight and may fall into problems later in the year if the export market continues to slow.

“Over the past two quarters, the price being paid for aluminium material has been very high and this has boosted recycling rates of the material, which in turn has boosted PRN generation, helping to explain the recent performance in this market,” Hall said.

In glass, recycling rates have been relatively stable, with a quarterly reduction on Q2 of just under 500 tonnes.

Production progress

Some 1,809,046 tonnes were processed, an overall drop on Q2 of 7,228 tonnes (with some submissions missing). Decreased production was announced for glass (-0.1 per cent), plastic (-1.6 per cent), energy from waste (-7.5 per cent), steel (-12.5 per cent), with wood showing a dramatic 27.5 per cent reduction – although this was partly due to a fire and growth in biomass markets.

Paper and aluminium on the other hand went up by 8.4 and 11 per cent respectively. Indeed, aluminium achieved the highest quarterly figure on record for this material (20,249 tonnes), 29.2 per cent above what the industry is required to process per quarter.

Similarly in paper, apart from Q4 in 2009, Q3 PRN generation (827,124 tonnes) is the highest on record, 29.3 per cent more than required for the period.

“It is surprising to see such a strong performance because of the current economic conditions and the falling recovered paper price,” t2e said.

In plastic, with a remaining balance of 150,074 tonnes required to meet its obligation, only slightly below the quarterly average for this material, the balance between supply and demand remains tighter than it has been in previous years, t2e said in comments on the figures on 24 October.

Recovery meanwhile continued to perform excellently, with the obligation met even without including carry in, t2e said.

“Set to a backdrop of high volatility in the financial and commodities markets, the Q3 figures show recycling and export rates seem to have remained resolute,” said t2e's senior market operator Tom Rickerby. “There is little evidence of the reported slow down in the export markets with paper and aluminium showing good quarter-on-quarter growth.

“Steel, plastic and glass remain stable, with only wood showing a significant fall,” Rickerby said further. “The latter can be put down to growth in the biomass markets and the continued impact of the fire at the Sonae chipboard plant in Knowsley.”

Market picture

Meanwhile after an increase in volumes traded in August, market activity quietened down in September. A total of 55,702 tonnes was traded during September, with 7,439 tonnes traded through the spot market and 48,623 tonnes through the forward markets.

Excellent volumes were traded in paper and for the first time the paper average of £1.09 (spot and forward price) traded above last year's price (up 16 per cent).

Aluminium volumes however only traded lightly – with the monthly average price, falling for the seventh consecutive month to £3.67, 89 per cent lower than the previous September's.

Low volumes were also traded in steel, with most Q3 buying already done – and the monthly average fell for the sixth consecutive month to £2.53.

Although there was a fall in PRN production between Q2 and Q3, the steel industry is still performing well, and in Q3 generated 8 per cent more than was required for the period, t2e said.

Good volumes were traded in plastic and although the price is lower than for the previous two months, it is still 82 per cent higher than it was in September last year at £5.30.

Glass traded in good volume, but the price fell for the seventh consecutive month, down 58 per cent from September 2010 and the lowest since September 2006.

The recovery price also fell – but to a lesser extent – 10 per cent on the previous month and 26 per cent on last year's with volumes on the increase.

Finally, it was a quiet month for wood, but the prices remained stable.

For more information: see www.t2e.co.uk; and for the Quarter 3 results go to https://npwd.environment-agency.gov.uk/Public/PublicDEFRAReport.aspx