ProGest - comment

We are no longer covering ProGest, but the company has interesting headlines for all of Europe today. The North Italian paper manufacturer has halted production across all its paper mills amid high energy prices. Wedged between commodity-like pricing of waste paper at the input and testliner variants at the output (to simplify greatly) energy prices are key to achieving a positive contribution margin and are the reason why plants like Mantova have had their own (stinky) incinerators. We expect competitors to follow suit until pricing on either side reflect the new cost reality. Overall this story is relevant for many commodity and volume producers in Europe and we expect to hear of more such stories soon.