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News of the possible blocking of petroleum and gas supplies from Russia has certainly shocked the European paper and board industries, with Italy’s mills particularly dependent on these imports.

The immediate increase in their prices had parallel effects on recovered paper which, at the same time, was witnessing the low collection volumes that are typical for March. Ex-works prices climbed sharply to more than Euro 200 per tonne for OCC and to around Euro 170 and above for mixed, creating difficulties for consumers with low stocks who were then obliged to suspend production for several days.

It was a similar situation for Europe’s other consumers but in a lesser way, with Italian prices probably the highest in the EU. Prices for recovered paper coming from direct collections were somewhat higher than those seen at municipal auctions which are linked to delivery times over the next two to three months and assume greater market stability at that future point.

Regarding recovered paper export prices, there were increases around the end of March for the current major importer, namely India, whereas prices were more stable for buyers elsewhere in Asia. Transportation costs continued to be high and sometimes problematic for the sector.

Paper mills responded to these circumstances by raising the prices of their products, receiving strong negative reactions from customers and converters who, in some cases, were unable to accept the new levels and began searching abroad for better-priced supplies. Amid this confused situation, April began with further price increases for all recovered paper grades, with the result that some lines of supply have been suspended. There has been more downtime even among major producers.

Collection issues have strongly affected deinking materials and also the higher grades in line with problems faced by Northern producers of cellulose and printing & writing papers. Italian production of printing & writing has been seriously impacted and this situation continued into early May, with repercussions for printers and editors. In parallel, various producers of Shrenz decided to suspend production of this grade because it was evidently uneconomic.

At the beginning of May, recovered paper prices have appeared to remain stable, although the problems surrounding gas supply are far from resolved despite the government announcing some financial assistance. Many businesses across the entire paper and board industry are prey to uncertainty and confusion; owing to developments in recent months, a reasonable level of stability is more a general wish than a business reality.