Progress Against Recycling Targets: 2023 Q4 Data Release

Despite the carryover looking positive, currently all PRN recycling grades appear to be behind target. However, this could be reflective of missing monthly data from reprocessors rather than low production levels. As we await the official obligation figures for 2024, along with the 2024 Q1 data next month, which will bring more complete reprocessing production figures, we anticipate gaining a clearer understanding of how the grades are progressing year-to-date against their annual targets.

2024 marks the first year since the onset of COVID-19 where we could see some stabilisation in the market. Nevertheless, it’s crucial to acknowledge the persistent challenges surrounding the cost of living crisis and to anticipate the impending legislative changes in the industry for 2024, alongside the ongoing issues in the Red Sea region.

While companies have become more adept in managing disruptions in the Red Sea, challenges persist, particularly concerning shipment availability, which significantly impacts exports, especially for Paper and Board products.

Paper and Board demonstrates a notable improvement in carryover from the previous year, showcasing a significant 331.48% increase compared to 2023 (244,510t vs. 56,652t). This is a positive indicator of stability for this grade however, it’s important to consider the broader context, particularly in relation to Wood recycling targets. Given the close connection between Paper and Board production and the Wood obligation, the recent increase in the Wood target introduces an element of uncertainty. While the carryover is encouraging, the potential impact of increased recycling goals remains uncertain. The interplay between these factors suggests that while Paper and Board is showing overall resilience, it’s essential to monitor how evolving targets may influence market dynamics moving forward.

As we anticipate the release of the 2024 Q1 data later this month, where reprocessors are legally required to report on their tonnage, we look forward to gaining further insights into the performance of Paper and Board this year. The official obligation figures are due to be released in May which will also inform how this grade is performing against target.

In contrast to Glass Remelt, Glass Other faced notable challenges throughout 2023, visible in a decreased carryover compared to the carryover figures at the onset of 2023 (2,755t compared to 6,614t).

Despite difficulties in the UK Glass industry in 2023, Glass Re-melt production demonstrated resilience, maintaining a consistent performance, supported by consistently high PRN prices last year, and attained a carryover into 2024 of 42,408t, a 22.5% increase compared to the carryover entering 2023.

This more encouraging (although still not comfortable) carryover figure will assist Glass Re-melt towards its 2024 increased recycling target, and help balance the overall Glass target following low Glass Other carryover. This assistance will be needed this year, as the UK Glass industry is still facing challenging times. Consumption patterns of bottled products, such as wine, are currently reduced due to the economic climate. Reductions in consumption can lead to a reduction in PRN production, so we must bear these patterns in mind.

With the 2024 Q1 data due to be released later this month as well as the official obligation due to be released in May, we will gain more of an understanding of the trajectory of these grades as we enter Q2.

Aluminium experienced a positive increase in carryover compared to the carryover into 2023, marking a 636.6% increase. Despite its positive trajectory, Aluminium faces a unique challenge due to its limited number of reprocessors. This constraint often contributes to stagnation within the market. Despite the increase in carryover, Aluminium’s market landscape remains influenced by its reprocessing limitations and pricing warrants continuous review.

As we await the release of the 2024 Q1 data next month and the official obligation figures in May, which not only mandates reprocessors to report on their tonnage we anticipate gaining further insights into Aluminium’s performance this year.

Steel’s carryover for the current period remains relatively consistent compared to the figures observed in 2023 (18,857t vs. 18,587t), representing less than half of the carryover recorded entering 2022. The release of the official obligation figures and mandated reprocessor data reports next month will provide a better understanding of Steel’s performance thus far.

It’s worth noting that Steel is often associated with recyclers registering for accreditations later in the year, a factor that may potentially impact its performance, especially considering the low closing prices observed for this grade towards the end of 2023. This delayed accreditation trend could potentially have a negative influence on Steel’s performance, demonstrating the need for careful observation and analysis as the year progresses, particularly in the upcoming quarter.

Plastic witnessed a notable increase in carryover by 177.6% compared to carryover brought into 2023, which at first glance appears encouraging. However, when compared to the carryover into 2022 (64,671t), this figure remains reduced compared to historical norms for Plastic carryover. Due to the increase in carryover, there is optimism in the market that price volatility could remain within much more manageable parameters this year. Nonetheless, it’s important to maintain review on this grade, particularly as we await the Q1 data and official obligation figures, as the plastic markets have a habit of defying predictions.

Wood experienced a 140.8% increase in carryover figures compared to carryover into 2023. Wood’s significant increase compared to carryover into 2023 is a positive development for this grade, aligning with its consistent positive performances during the 2023 compliance year. This stability in performance suggests that prices are likely to remain steady for Wood. However, it’s essential to consider the broader context, particularly with the increase in the Wood target. Additionally, it’s important to remember that Wood also contributes to the General Recycling requirement. As we await the Q1 2024 data and the release of official obligation figures, we anticipate gaining a more comprehensive understanding of Wood’s performance against targets this year thus far.

If you have any questions about PRN trading or packaging compliance, please contact us and one of our specialists will respond to you as soon as possible.