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Italy

The problems and restrictions resulting from the COVID virus are gradually receding and industries are resuming their activities little by little, leading to a corresponding increase in the generation of recyclable materials such as recovered paper.

In 2020, Italian paper mills’ total production was more than 8.5 million tonnes; by the end of May 2021, more than 4 million tonnes had already been produced for a year-on-year increase of around 10%. This is despite the fact that energy costs are some 20% higher than in neighbouring countries and that the cost of chemicals has climbed too. This is not to mention that raw material prices - including those for both virgin pulp and recovered paper - have also increased.

Production in May was 22% higher than in the same month last year, with a 24% increase for corrugated. This overall upturn in paper and board output is the result of new machines coming on stream as well as the conversion of existing capacity. In the first five months of 2021, recovered paper consumption was running 15% higher year on year at 2.4 million tonnes, with the increase in May being 19%.

Having declined in late April and the first half of May, recovered paper prices increased in June to around Euro 165 per tonne for mixed paper and Euro 180 for OCC, giving a modest differential of approximately Euro 15 between the two grades. Domestic demand for both has been consistent while collection volumes are improving but are still insufficient. Owing to their comparable prices, there is a scarcity of deinking materials that are often found in flows of mixed paper. Also scarce are good-quality white shavings, with prices remaining stable at around Euro 400 per tonne despite an increase for virgin fibres. White letter is being quoted at around 300 per tonne. All above-mentioned prices are ex-works.

Healthy domestic demand coupled with high freight costs and container availability issues has led to a reduction in exports to Asian markets. Some regular consumers in Asia have been obliged to hike their buying prices significantly.

Competition for sources of recovered paper is clear to see, but paper mills are squeezed between the necessity of feeding their machines with more expensive materials and the difficulties of passing on these increases to their customers/converters. As an indication, the fluting price reached Euro 500 per tonne in the first week of July.

Volatility within the paper and board industry creates uncertainty. News regularly emerges of supply contracts being recalculated between mills and consumers, leading to repercussions for the recovered paper sector in terms of delivery times and prices. Adding to the confusion, some operators build buffer stocks of paper and board as well as of recovered paper. Given that some of the mills to have produced at full capacity over recent months must now consider maintenance shutdowns in August, operators should look to build an adequate buffer stock. Some increase in recovered paper imports has been indicated.

Good, constant demand for packaging has been reported. At the same time, the European Commission’s listing of polycoated materials for food and similar uses will certainly affect municipal collections of urban waste, further complicating the achievement of a Circular Economy.

Meanwhile, Unione Italiana Food noted on July 1 that the anti-trust authorities had ascertained the existence for 13 years of a price cartel among leading corrugated packaging producers and that this has led to fines of more than Euro 280 million. This has been recently confirmed by the Tribunale Amministrativo Regionale and compensation actions are understood to be on the way.

Serious problems with the collection and final disposal of urban waste are apparent in parts of the centre and south of the country with pro-ecology administrations. The establishment of convenient and efficient thermal recovery plants is once again under debate and being studied by the Ministry of Ecological Transition.