Joseph Doherty, Chief Executive of Re-Gen Waste, has been assessing the latest packaging recycling data.

The latest packaging recycling data has led to a dramatic fall in plastic packaging recovery note (PRN) prices demonstrating the volatility of a system that is so often based on perception.

The graph below shows the changes over the past 4 months. Two weeks ago, plastic PRNs were trading at £255/tonne. Following the release of the monthly data on 10 October, it fell £20 and, today, the Q3 data has seen it fall to £120. For many exporters, this will have led to huge losses as higher PRN prices would have been factored into their buying.

The proponents of the PRN system will argue that this is how the system is designed to work, the laws of supply and demand. And when I look at the recycling data against the producer data, it looks as though, across all the materials, recycling targets will be easily met. But closer scrutiny of both the recycling data and the producer data indicates the need for caution.

The public register shows that at present, there are 6,558 registered producers. This compares with 6,918 by the end of 2022 and it means that data from around 400 producers has still not been submitted. This creates a distorted demand picture with the current reported 2023 obligation at around 93% of the final 2022 obligation. This could see another 60-80k tonnes added to the plastic PRN requirement by the end of the year which would significantly shift the balance. The total plastic recycling reported for the year after publication of the Q3 data shows that against the current obligation, we only need 219k tonnes recycled in Q4 to meet the target, a very easy position when Q3 plastic recycling achieved 318k tonnes. But if demand increases to the 2022 level, then Q4 would need at least 300k tonnes to meet the target, let alone produce any surplus for carry forward into 2024. As well as plastic, 2022 levels of obligation would also put both the glass and overall recycling targets at risk.

There must also be caution over the level of plastic recycling reported for Q3. Analysis of the data shows a significant jump in the export of PET bottles, up 82% on Q2 levels, the equivalent of over 17k tonnes.

And there must also be concern over the export destinations for plastic. Turkey has seen a huge jump in the tonnage of plastic received form the UK this year and in Q3, accounted for 26% of plastic packaging waste exports. Given the restrictions on plastic waste imports by the Turkish authorities, it is assumed that this must also be under investigation.

The EA makes it clear that it publishes the data on a provisional basis awaiting full verification before final publication in mid-November. But if the data is over reported, then a correction would add further pressure on the end of year of year position.

Whilst clearly, the main influence over PRN prices is the supply and demand balance for this year, some consideration must be given to the likely position in 2024. The packaging recycling targets for next year have yet to be declared by Defra, but are expected to increase from this year. In theory, this will create greater demand for PRNs but that depends on the level of packaging placed on the market this year to which these targets will be applied.

If the cost of living crisis has reduced consumption in 2023, then higher targets might still see lower demand in 2024 but given that this will not be known until well into 2024, then a declaration of higher targets could see extra demand for December PRNs to be carried forward into 2024.

So whilst the current falls in PRN price are understandable following the strength of the Q3 data, a note of caution is advised for anyone thinking that the currently published numbers on both supply and demand present the final position for the year.