The Recycling Association have strongly questioned reports blaming the role of exports and the PRN system for the difficulties currently being experienced by Closed Loop Recycling.
CEO, Simon Ellin said “Firstly, we lend our support to Closed Loop Recycling and hope that they can find a way out of their current difficulties. We need a strong UK recycling infrastructure and we need to find ways of supporting it, but to lay the blame on the role of exports and to moot distorting the markets by manipulating the PRN system is a very dangerous short term solution.
Because we are in a commodity based market where supply and demand and thus price can fluctuate widely, companies whom rely on the sale of recyclable materials need to structure their businesses to shield themselves from these fluctuations. The primary reason for the current difficulties in the plastics industry is the downward pressure on the global price of oil. However, as we know, this is a short term problem and we know the long term trend is the rising prices in the oil sector. Plastics re-processors need to be in a position to ride these fluctuations by being in a position to pass the burden down the supply chain. We have repeatedly highlighted that if we want a sustainable recycling infrastructure then the companies at the top of the supply chain, in this case the retailers, need to make a contribution. All the big retailers are more than happy to ride on the back of our fantastic industry and to use their own perceived sustainability’s as a marketing ploy, so the time is now right to nurture this relationship by assisting the likes of Closed Loop financially to ensure that recycled polymer is favoured over virgin.
However, we are very clear too that any measures that are taken to skew the market in favour of either UK or export would be short-term madness and will have an effect that would negatively impact the whole recycling infrastructure going forward. We are fully supportive of a totally level playing field for PRNs/PERNs and we do not agree with the bias we have in favour of PERNs due to different levels of acceptable out throws in relation to the PRN. However, the advocacy of the changes that the BPF have argued in favour of, which includes a split target for plastic packaging recovered domestically and overseas which will lend a bias to the UK, is wrong. Let’s not forget that re-processors are the not the only link in the supply chain. We have to export circa 75% of all the plastics we recover because we simply don’t have the capacity in the UK and it is this market that the merchants collecting the materials rely on. Export markets not only provide the market capacity, they also provide the competition element that keeps prices higher and sustainable in the long term. Indeed the re-processors such as Closed Loop have developed their businesses on the back of this established infrastructure which has grown on the back of the export market and any measures now to indirectly squeeze them out of a competitive market would be wholly counterproductive in the long-term.
It is partnership and shared responsibility that is the solution to this problem. The costs must be shared down the supply chain, and if we are to have a sustainable market infrastructure, we need to ensure we come up with strategies and solutions that benefit the whole of the recycling infrastructure”.
Dr Simon Ellin
The Recycling Association
13th April 2015