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Avilon Oy Temporarily Stops Production At Its Finland Plant.

March 31, 2011

Supply problems with dissolving pulp is reason for halt in production.

Finnish holding company Neo Industrial Oyj said today its viscose-fiber subsidiary Avilon Oy will temporarily stop production at its plant in Valkeakoski, southern Finland, in April 2011 due to supply problems with the main raw material, dissolving pulp.

The move will lead to temporary lay-offs but no redundancies are expected.

Global demand for both viscose and dissolving pulp has exceeded supply due to high prices for cotton, and Avilon will not be able to sustain profitable production volumes. Negotiations with selected suppliers are ongoing and production is expected to restart in July 2011 at the latest.

In addition, based on continuously growing demand for viscose fiber, Avilon has decided to ramp up output with a second production line, expected to be operational in August.

The Valkeakoski plant opened in January 2011 and produced 4200 ton of viscose fiber in the first quarter.

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