Q1 2024 Unverified Packaging Recycling Data Released
Earlier this week, on Monday 22nd April, the first set of unverified quarterly packaging recycling data for 2024 was released. This data outlines the total volume of packaging that has been reprocessed or exported in Q1. However, it's important to note that this information is still unverified as some reprocessors and exporters are yet to report their figures. Therefore, these volumes may change before the verified version is released later this month, on 15th May.
The Q1 data, although unverified at this stage, is eagerly awaited due to the lack of preceding information. It offers the first detailed insight into the performance of packaging recycling. Depending on the figures, it has the potential to significantly impact the respective PRN markets.
Table 1: 2024 packaging recycling levels alongside confirmed carry in and an estimated UK obligation.
The UK obligation is determined by the final packaging submissions of all obligated producers and DEFRA's recycling targets for 2024. As a result, it will dictate the number of PRNs required in 2024. As the UK obligation figure is not yet available (until 15th May), accurately tracking the progress of Q1 recycling levels towards the UK's final goal is difficult.
To offer some sort of performance benchmark, we've used an estimated obligation, which is made up of the final packaging activity of all UK producers in 2023 and incorporating the 2024 recycling targets. It's important to note that the UK obligation is influenced by factors beyond just the recycling target. Behaviours and attitudes towards packaging use in the 2023 calendar year will also impact the demand for PRNs. Therefore, while the final figures may present a slightly different picture, this estimated obligation remains valuable in gauging how well each material is potentially performing against its recycling target at this early stage.
Figure 1.1: Q1 2024 unverified packaging recycling levels without carry in PRNs from December 2023 included.
Figure 1.2: Q1 2024 unverified packaging recycling levels with carry in PRNs from December 2023 included.
Paper – Paper has performed strongly in the first quarter, recycling over 1,000,000 tonnes of packaging. This places Paper at 29% of the overall estimated target without including carry-in figures. When carry-in figures are taken into account, Paper's position is further strengthened. Hopefully, this momentum will continue throughout the year. With DEFRA increasing the Wood target, surplus PRNs for Paper will be in greater demand than before, to help the UK in achieving its General Recycling target.
Glass – Glass remains a material of focus due to recent price volatility. Examining Q1 data from previous years, Glass typically exhibits lower volumes in Q1 compared to subsequent quarters, indicating an encouraging trend of increasing recycling rates as the year progresses. Currently, Glass Remelt rates are slightly below target without factoring in carry-in figures, however this position improves once last year's carry-in figures are included. Alongside Aluminium, Glass is closest to its target and requires close monitoring and attention.
Aluminium – Aluminium saw just over 35,000 tonnes recycled, which is slightly lower than Q1 last year. We've been informed of unplanned shutdowns in major reprocessors, which could be a contributing factor to these figures being slightly below our expectations. Because there are fewer PRN reprocessor and exporter accreditations, Aluminium can be more susceptible to supply changes compared to other commonly used materials. This is an area of interest to watch closely, with hopes that recycling rates will pick up and prices will respond accordingly.
Steel – Steel has started the year positively, with 97,000 tonnes recycled in the first quarter. However, news of major infrastructure changes in one of the UK’s key Steel PRN suppliers suggests a potential reduction in PRN supply in the later months of the year as they transition to a greener, more sustainable way of operating. It is therefore important to monitor the Steel market throughout the year to assess the impact of this development. Just like Aluminium, a reduction in supply from a key Steel PRN supplier could significantly impact progress toward the target. We'll keep a close ear to the ground on this matter and ensure you're updated accordingly.
Plastic – Plastic has made a strong start to the year, surpassing the 300,000-tonne mark in Q1 for the first time. The freezing of the recycling target and lingering effects of price increases from the end of last year seem to have contributed to its solid start. Plastic currently sits above the estimated required level at this stage of the year. However, given the dynamic nature of recycling markets, particularly for Plastic, we will remain vigilant as circumstances can change rapidly.
Wood – Wood has also started the year with strong momentum, currently exceeding the required level to meet its recently increased recycling target by 17%. Despite the increase in the wood target, it seems to be on track to continue supporting the General recycling target, albeit at a slightly lower level than in previous years.
Summary
The carry-in levels from PRNs produced in December of last year, which have been carried over into this year, have shown a significant improvement compared to last year. While these levels may not be at their maximum strength, considering the starting position of the 2023 compliance year, having carry-in levels similar to previous years has restored the market to a more familiar state. This has helped alleviate early pressure on all materials. However, the UK still has a long journey ahead, and it's crucial that we maintain high recycling levels to preserve and enhance this buffer for future years when it may be needed.
The Q1 data shows a strong start, with two materials just slightly behind and the majority either on track or surpassing expectations at this stage. While this is promising, the true state of the UK's recycling progress remains unclear until we receive the initial UK obligation confirmed by the Environment Agency to track against. These figures will effectively determine the demand for PRNs in 2024. We will need to consider these figures alongside a different available carry-in scenario for this year and the current progress we've made in terms of supply, as confirmed this week.
The PRN system is designed to stimulate recycling levels and react to any declines in progress by adjusting prices upwards to encourage more recycling of packaging materials and consequently generate more PRNs. Even if the UK obligation decreases, achieving all targets and ensuring compliance will undoubtedly be challenging. However, it's encouraging to see that the PRN system may indeed be capable of facilitating this once again, hopefully in a smoother manner than in 2023, provided that recycling rates stay elevated, and demand becomes clearer and more manageable.
Beyondly Members
We plan to look at the verified data, as well as the all-important UK obligation and PRN market and pricing as usual in our upcoming PRN Market Update webinar, which we are running on 23th of May at 10am.
If you have any questions at all, please don’t hesitate to get in touch with your account manager or the packaging team and we’ll be happy to help.