Sat. Sep 24th, 2022

A trade association’s chief said rising costs were forcing many plants to cease operation for now

The armed conflict between Russia and Ukraine is having a ripple effect on paper, cardboard, and paper pulp manufacturers in Italy, with more and more plants forced to halt production due to rising energy prices. Lorenzo Poli, chief of the Assocarta trade association, warned on Tuesday that the energy crisis was affecting the entire production chain.

Poli said that the industry had already been battered by the pandemic but still “held out, even producing at a loss,” however the recent rise in energy prices has dealt a further blow to paper manufacturers in the country. He also urged the European Union to take immediate steps to, at least partly, offset the negative effects of the current crisis.

Francesco Zago, CEO of Italy’s Pro-Gest paper-manufacturing group, told Corriere newspaper that he had to invoke force majeure and “temporarily stop the production” at six plants. According to Zago, the “price of natural gas today is more than ten times higher than twelve months ago and has tripled in just over a week.” He echoed Poli’s calls for authorities to support the industry, stressing that while a ton of paper goes for roughly 680 euros, energy costs alone currently total 750 euros per that amount of paper.

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According to Italian media estimates, there are about 150 paper plants across the country, with the industry generating a turnover of 8.18 billion in 2021.

Following Russia’s military offensive in Ukraine and the subsequent sanctions imposed on Moscow by the West, natural gas prices have reached record levels in Europe, with an all-time high of 345 Euros per megawatt-hour recorded on Monday.

Europe is heavily dependent on Russian energy imports, with officials admitting that bills are bound to further balloon in most countries in the near future.

However, the EU as a whole – as well as individual member states – have vowed to wean themselves off Russian natural gas and oil imports over time, expediting the planned transition to renewables. Other options, such as imports of liquefied natural gas from Middle Eastern suppliers, are also being considered.