17th April 2020

In any other compliance year, the UK obligation and Quarter One 2020 recycling and recovery data would be a talking point with respect to implications for the remainder of the year. However, as a consequence of COVID 19, 2020 will not resemble a ‘normal’ compliance year, and with the agencies supporting producers at this difficult time through allowing late registrations and submission of estimated data, the precise impacts are difficult to ascertain before the updated data is published in August 2020.

The pandemic not only affects the global demand for recyclate and its market value, but perhaps more crucially, the quantity of packaging waste that arises and can be collected and reprocessed. The UK’s ability to achieve the targets in 2020 is unclear at present, although for most materials, the voluntary May 2020 monthly data, published on 10th June, demonstrates an increase in recovery when compared with the April 2020 monthly data. REPIC, together with other stakeholders in the sector, is working hard to develop proposals for Defra that will help achieve compliance, should additional measures be required in the current, unprecedented circumstances.

		The COVID 19 Effect
Material	Position at Q1 2020	Likely impacts on waste arisings	Likely impacts on recyclate markets
Paper / Board	Despite poor performance compared to Q1 2019, the UK was on track to meet the paper target but with less surplus than ideal.	Decline in commercial and industrial arisings as a result of reduced business activity Increase in domestic arisings as a consequence of online retail	Strong European demand for both mixed paper and board grades reported Increased shipping container costs affecting other exports
Glass	The UK obligation for 2019 was impacted upon by the 2018 “World Cup Factor”. 2020 performance is difficult to gauge without sight of the obligation.	Reduction in hospitality glass Increase in domestic glass	Economic downturn may lead to a reduced demand for glass aggregates in construction Lower quality recyclate may be produced, due to reduced manual sorting of collected glass, restricting the end-market applications
Aluminum	Strong start to 2020 reprocessing, which the May monthly data, indicates is being sustained and on track to achieve the 4.9% target increase.	Reduction in hospitality aluminum Increase in domestic aluminum	*Due to the high recyclate value, short term fluctuations are of limited consequence, although its storage until conditions are favourable will affect timing of PERN issuing and perceived recycling performance.
Steel	3.7% target increase, although, steel packaging usage is declining year on year. The May monthly data indicates that this material may struggle, with a relatively low increase in monthly reprocessing compared to the April data	*Significant reduction expected. Whilst 42% of 2019 recycling was UBCs (used beverage cans), the balance was the steel packaging content in other steel grades that arise particularly in construction and demolition and commercial and industrial waste.	The Steel market is currently extremely depressed, with many processing facilities closed Despite its recent acquisition, some uncertainty regarding the future of British Steel in Scunthorpe.
Plastic	Q1 2020 reprocessing provided a promising start to the year. Some reduction in usage in 2019 as a consequence of increased consumer pressure and high 2019 PRN prices may be evident in the final UK obligation,	Reduction in commercial and industrial arisings and on-the go drinks Some increase in domestic arisings possible	Significant increase in UK reprocessing capacity in 2019, with further capacity due to come on-line in 2020 Increased container costs for exports.
Wood	11.6% target increase, however, usage has declined year on year for the last 3 years.	*Significant reduction expected, given the proportion generated from the commercial and industrial and construction and demolition sectors	Strong demand to replenish biomass stocks All UK panelboard manufacturers are closed and demand may be low on reopening if there is construction industry decline. *The May 2020 monthly data offers little comfort, with reprocessing lower than reported in the April 2020 monthly data.

Whilst each material presents a specific challenge, those most reliant on non-domestic waste arisings may be of most immediate concern. The likely UK compliance position is likely to remain unclear for some time.