PRN Market Update: May 2023

The last year was a turbulent year for packaging recycling. Prices were the highest they had been in over 20 years across every material you would need to purchase PRNs for. This was mainly due to recycling obligations increasing but the actual level of recycling decreasing. Last year, the paper obligation increased by over 340,000 tonnes but recycling levels dropped by over 100,000 tonnes, leaving a gap of 440,000 tonnes.

It wasn’t just paper that saw a gap too. There was a similar situation with plastic as well. The obligation for plastic increased by 6% while recycling only saw an increase of just under 4%. Compliance in the UK for plastic was in the balance all year with us only just making it at a small surplus worth three days recycling tonnage.

As a whole, the UK did comply with the regulations. However, they only just made the targets. Looking at the carry forward tonnage, the surplus PRNs from December recycling that can be carried over to the next year, you can see exactly how we only just made it. In 2021, we carried over 503,000 tonnes of PRNs into 2022. However, in 2022, we carried forward only 141,000 tonnes of PRNs. And while that might sound like a lot, this would only really cover just under a week’s worth of recycling. Because of a smaller carry forward tonnage, the UK will need to see much higher levels of recycling this year to meet the obligations if they’re the same as the previous year.

• The levels of paper recycling in Q4 of 2022 recovered and have remained strong throughout Q1 of 2023. This is on the back of historically high prices for PRNs so it’s an indicator that recycling levels will remain high.
• However, this isn’t the case for every material and can’t guarantee that recycling levels will remain high. Plastic recycling has dropped by 27,000 tonnes in Q1 of 2023 when compared to Q4 of 2022 despite record high prices.

It’s clear to see that PRN prices have remained high in the start of 2023, on the back of record level high prices in 2022. If recycling levels for paper continue to sit at a high level, prices will likely reduce. However, one bad quarter could cause an escalation in prices. In order for plastic PRN prices to come down, there needs to be much higher levels of recycling otherwise prices will rise further. If there’s a reduction in obligation, it may help but overall, more sustained levels of recycling are needed this year to keep prices under control.