Energy, Turkey and more: all the problems of the paper industry
In Italy the demand for paper increases, but domestic producers are unable to satisfy it and imports are resorted to. Blame the energy crisis, which however is not affecting companies in Spain and Turkey in the same way. All the details
In the first nine months of 2022, paper production in Italy decreased by 3.6 percent year-on-year, despite demand increasing by 8.2 percent.
Given the impossibility for national industry to increase its output levels, this deficit between supply and demand was compensated for by imports, which in the same period – according to still provisional data – in fact grew by 20 per cent, in particular by Spain and Turkey.
THE IMPACT OF THE ENERGY CRISIS ON THE ITALIAN PAPER INDUSTRY
The increase in purchases of paper from abroad represents a "risk of loss of competitiveness" for Italian companies compared to foreign ones, Lorenzo Poli, president of Assocarta, the reference association for paper producers, told Il Sole 24 Ore paper, cardboard and pulp. The cause of this situation of production weakness, despite the presence of a receptive market, is "mainly attributable to one factor", explains Poli: "the energy cost".
The paper industry is one of the so-called "energy-consuming" sectors , so called because they consume large quantities of energy in their production processes. The crisis in the prices of electricity and natural gas (the latter, despite having returned to pre-war levels , however remain much higher than the average of past years) therefore greatly affects the activities of paper companies, which face itself three possibilities: pass on the increases in production costs to customers, raising the price of the finished product; reduce production; close the factories altogether.
WHAT SPAIN AND TURKEY DO
Whatever the choice between the three options, Italian companies always run the risk of losing competitiveness – and market space – compared to foreign competitors , whose plants are located in countries where energy costs are lower or which can take advantage of the low value of their currency to attract importers. This is the case, respectively, of Spain (almost isolated from the European energy market due to lack of connections, which for months has imposed a ceiling on the price of gas ) and Turkey (which has heavily devalued the lira precisely to encourage exports).
In addition to energy consumption, the increase in the prices of raw materials and chemical additives used in pulp processing also weigh on the paper industry.
DOES TURKEY SELL RUSSIAN PRODUCTS?
Furthermore, Turkey – writes Il Sole 24 Ore – is considered by various entrepreneurs from various sectors as a possible transit area "to triangulate Russian goods blocked by European economic sanctions".
WHAT THE GOVERNMENT HAS DONE
Lorenzo Poli said he "very much appreciated" the government's decision to postpone the use of tax credits for the paper sector "and that the new budget law provides for them for the first quarter with the possibility of using them until December 2023": in this way companies can "use credit as a competitive lever on price lists compared to foreign competitors".
WHAT TO DO TO BOOST THE PAPER SECTOR
In addition to the provisional, emergency interventions, which according to Poli must however be "constant" as long as "this situation on energy costs persists", Assocarta believes that structural measures should also be implemented such as the gas release and the electricity release , i.e. the transfer of gas and electricity at regulated and controlled prices.
Already last October, in his speech at the opening of the International Exhibition of the Paper Industry, Poli had declared that "it is estimated that in the first nine months of this year [refers to 2022, ed . ] the gas bill of the paper sector has exceeded by more than 95% that of the whole of 2021, equal to over 1.3 billion euros”.
“Between 2020 and 2022″, he added, “the impact on turnover of the cost of gas went from 4.2% to 47%”.
THE CIRCULAR ECONOMY OF PAPER
Putting the energy crisis aside, however, Poli describes a positive future for the Italian paper industry, which already applies a circular approach – that is, the reuse of raw materials that have reached the end of their life – to its production processes.
Italy is the second European country for paper recycling, after Germany. In the packaging segment, writes Il Sole 24 Ore , the recycling rate is 85 percent, and the average rate of circular consumption in the entire sector is 63 percent.
In this regard, Poli had said that "the strong impact of energy costs on the Italian economy is also undermining the circular economy as well as opening the domestic market to environmental dumping with the arrival on European and Italian territory of paper mills that cost less in terms of energy but above all the environment".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/industria-carta-impatto-crisi-energia/ on Sun, 15 Jan 2023 06:24:15 +0000.