Holmen Paper is to ride out a drop in orders with a tough decision not to halt production.

"Not until now have we seen demand weakening," said Magnus Hall, president of the newsprint and magazine division of the Swedish group.

"Orders are usually a little lower during the summer and then tend to increase during the autumn," he told Reuters. "But that increase hasnt happened this year."

But Holmen Paper said it would not stop production because it had already decided to upkeep equipment, which would slow down capacity.

"Planned stoppages for upgrades and maintenance of machinery should be sufficient," said Hall

Holmen Paper produces around half of Holmen group sales, and its share price fell 2.5% after the announcement of the reduction in orders.

The group also owns Iggesund Paperboard and Timber and Holmen Skog.

Holmen Papers sluggish orders came as a blow after the groups interim results in August exceeded analysts forecasts.

The company said at the time that newsprint and magazine paper markets were steady, but that coated magazine paper had weakened and paperboard remained weak.

Holmen Paper reported a 12m rise in operating profits to 91m from January to June on a turnover of 548m up 57m.

Story by Jez Abbott