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Most discussions concerning Packaging Recovery Notes (PRNs) continue to centre around the ongoing issues in the Plastic market. The general consensus seems to be the continuing disparity between Supply and Price not seeming to make sense. The August figures following on from the previous month’s record supply saw another stellar return of 87,000 tonnes. To put this in some context we now need to produce the remaining 24% of supply in the four months left in the year.

It may be for this reason we have started to see some softening in the price during this last week. Prices dropped into the high seventies before flirting between £77 to £80 until the end of the week. With such good supply being reported, it is thought that buyers have started to resist committing to the higher value trades in the hope that the next set of supply figures show indications of recovery and subsequent lower prices on the horizon. Reports of yards being stripped of material also offer a good indication that, at £80.00 per tonne, the evidence note value to assisting to identify new outlets via the export markets. While this will be a comfort to many concerned buyers, indications are that those with options on transitional tonnage will be allocating most forward for 2018 so further volatility cannot be ruled out towards the end of the year.

As reported previously, the Paper market has seen an increase in note values as sellers become cautious about overcommitting uncontracted tonnage. Most sellers have some excess in the bank but, due to ongoing concerns, they are not prepared to commit to releasing the tonnage until the end of the year. Buyers who have felt comfortable in leaving buying until the final months have decided, in light of recent volatility in Plastic, to address uncontracted tonnage requirements early which in turn has placed upward pressure on current Paper prices. Steel prices have started to drift down towards general recycling buying levels with previous supply reports indication a very healthy supply, however August’s generation was recorded at 13,000 tonnes, the second lowest this year.

PRN prices graph

Toddpak pay close attention to the markets and this year secured their plastic PRN requirement well in advance of the dramatic market upturn.