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The Final Word by Helen Roush

In a recent press release, Lessobo Paper, a Swedish manufacturer, announced that the increased electricity prices have caused them to halt production.

The press release states that "the electricity cost for Lessebo Paper has unprecedently increased from €3 million to €19 million per year."

The release goes on to state that the "spot price for electricity in south of Sweden, has significantly increased for the past months. Today Wednesday, August 31, the electricity price is at a level of EUR 518,73 per MWh resulting in a daily electricity cost of more than €58,000 for Lessebo Paper. As a result, on Wednesday August 31, production at Lessebo Paper will be paused. Going forward a decision for production will be taken daily depending on the electricity price for the upcoming day.

The paper industry is electricity-intensive, and the electricity price increases will most likely, not only affect Lessebo Paper, but several industries in south of Sweden."

It was recently announced that factories in Spain are cutting production due to soaring energy prices. In an article from Anadolu Agency, it states that "For the first time, paper producer Saica Group announced that it would close three of its four factories in Spain given that the price of gas has gone up by 300% in Spain in just eight months."

We also recently reported that Metsa Group warns of toilet paper shortage as energy costs wipe out production and that Metsa Tissue is cutting back on production levels in recent weeks.

In a recent article from Time, it states that the Europe energy crisis will get worse. The article states "To be clear, the energy crisis is already here, and Russia is fully to blame. Natural gas prices topped $3100 per 1000 cubic meters in mid-August, a 610% increase over the same time last year as measured by the Dutch TTF market. At this price, many power stations cannot afford to operate for long. As a consequence of the rising cost of input fuels, benchmark electricity prices in Europe have surged almost 300% in 2022, breaking records. Taken together, energy prices are ten times higher than the five-year average."

According to a recent article from Bloomberg, it states that "Energy prices surged in Europe after Russia halted its biggest natural gas pipeline to the continent indefinitely, plunging the region deeper into a crisis that could push major economies into recession and force rationing.

Benchmark gas futures jumped as much as 35%, the most in almost six months, and electricity prices increased. The supply cutoff rippled through markets, hitting equities and pushing the euro to a 20-year low."

In a recent article from Reuters, it states that "the Dutch TTF October gas contract had eased to 256 euros, up 23% on the day by 0723 GMT but almost 400% higher than a year ago. This year's price surge has squeezed struggling already consumers and forced some industries to halt production.

Europe has accused Russia of weaponizing energy supplies in retaliation for Western sanctions imposed on Moscow over its invasion of Ukraine. Russia says the West has launched an economic war and sanctions have hampered pipeline operations."

Reuters goes on to state that "EU countries' energy ministers are due to meet on Sept. 9 to discuss options to rein in soaring energy prices including gas price caps and emergency credit lines for energy market participants, a document seen by Reuters showed."

We will keep you apprised of further developments.

Helen Roush is Executive Vice President of Paperitalo Publications.


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