“The release of interim Q1 2020 data has provided good insight into the health of recycling markets prior to the escalation of the Covid-19 crisis. In more ‘normal’ conditions the strong results in Plastic, Aluminium and Steel, combined with good carry-in figures would have resulted in downward price pressure in these markets,” explains Head of Trading at The Environment Exchange, Tom Rickerby. “However, the market response is likely to be tempered by the uncertainty of the Covid-19 situation and an anticipated contraction in PRN supply in Quarter 2.”
He continues, “The Q1 returns in Paper, Recovery and Glass are less positive, indicating potentially tight markets and justifying the recent upward price trend across all three materials. The downturn in Paper generation looks likely to place pressure on the General recycling market. Despite a strong quarter, Wood PRN prices have also seen positive price movement, buoyed by a rising Paper/General price and fears of an acute downturn in PRN generation – Wood recycling markets have seen some of the biggest disruption to supply chains following lock-down measures. Spot prices in Plastic and Steel remain relatively stable for now, whilst Aluminium has seen the biggest correction, down 16% to £105 per tonne.
“Trading activity is understandably cautious across all markets as the longer term impact of Covid-19 on recycling markets and the PRN system remains unclear, however traders should take some comfort that a generally strong supply picture for Quarter 1 should provide some buffer to a potential downturn in Quarter 2.”
