Sales of biodiesel at German petrol stations have come to a virtual halt, leading German bioenergy company Verbio said on Thursday.
Biodiesel is currently more expensive than fossil diesel in Germany following a further tax rise on green fuels this year and a fall in crude oil prices.
Tax increases in combination with the falling prices for fossil diesel have brought the B-100 (petrol station) market to a virtual standstill, Verbio said.
Verbio said its biodiesel production in the first quarter of 2009 fell to 78,866 tonnes from 93,907 tonnes a year earlier. It has capacity to produce about 450,000 tonnes annually.
The European Union's decision in March to impose import duties on imports of U.S. biodiesel can no longer help boost German petrol station sales because of the price disadvantage caused by the tax, Verbio said.
The company said in a statement on its quarterly results announced on Thursday it was hit by rising raw materials costs.
The production costs generated by raw materials contracts could only be partly passed onto the market in the first quarter due to falling fuel prices in the first quarter of 2009, the company said.
Verbio largely produces biodiesel from rapeseed oil which has risen in price by about 100 euros a tonne so far this year largely because of fears of tight global soyoil supplies.
Germany's government has also decided to cut its compulsory blending for biofuels in fossil diesel and gasoline to 5.25 percent in 2009 from 6.25 percent previously planned.
But new technical specifications permit a voluntary seven percent biofuel content in fossil diesel, Verbio said. This meant some extra demand for biodiesel could be generated if oil companies decided to fulfill the overall blending quota by concentrating on diesel blending.
Verbio's first quarter bioethanol production rose to 42,788 tonnes from 13,560 tonnes. The company has capacity to produce 300,000 tonnes of bioethanol annually.
Verbio on Thursday posted a first quarter net loss of 13.8 million euros against a loss of 1.4 million euros in the same quarter last year.
(Reporting by Michael Hogan; Editing by Keiron Henderson)