Avilon Ltd, part of Neo Industrial's Viscose Fibers business, is temporarily shutting down production in its Valkeakoski-based factory. The shutdown is due to viscose fiber's globally poor market situation.

Viscose fiber market's weakening that started late spring is not only normal seasonal fluctuation, but also consequence of overheating. The market suffers from a surplus, and stock levels are high especially on the largest market, China, while factory utilization is low. Due to the surplus, the price of fiber has sunk nearly 30 percent in two months.

- It is difficult to estimate when the standard fiber market will make a turn to positive. We have better visibility with fire retardant fiber, but the market is also sluggish. According to its strategy, Avilon has however reached its previous, good market position in the United States fire retardant fiber market, which is important in the long-term, reminds Neo Industrial's Managing Director Markku Rentto.

Commercializing of the pulp converting technology that Avilon has developed is also proceeding according to plan.

Avilon will now postpone the startup of a second main production line, planned for August, but continues to prepare for it.

During the shutdown, Avilon will generate revenues from its current stock, including both standard and fire retardant fiber. The shutdown will not compromise the delivery accuracy of fire retardant fiber. Avilon maintains its good service availability with a fire retardant fiber stock estimated to last through the third quarter.

Due to the shutdown, Avilon has today given its entire staff notice of temporary layoffs of less than 90 days. There will be no redundancies.