More bad news for listed biofuels companies. D1 Oils has fallen 25% to 73p after the biodiesel specialist revealed it is looking at ways to cut costs.
This means it has started a consultation process with employees at both its Middlesborough and Bromborough plants so it can "manage the business proactively in a difficult market".
Analysts at Ambrian said: "With a great deal already invested in the conversion to biodiesel production of the former chemical plant at Bromborough, this news does not bode well for the plant's future." Ambrian has a reduce recommendation on the shares.
The problem is that D1 is facing competition from imports of heavily subsidised US biodiesel.
Ambrian again: "Given the continued tough market for European-based biodiesel refiners and traders, it is not too surprising that that this news has come out. The so called 'splash and dash' loophole which allows US exporters of biodiesel to benefit from a double subsidy on their production has hit the European biodiesel industry hard.
"'Splash and dash' is due to end under the terms of the new Energy Act in the US, but not until the end of this year. With EU mandatory blending limits for biodiesel not due to come into force until later in the year, times remain tough for UK manufacturers and traders."
Last July an Aim-listed competitor Biofuels Corporation was taken private after running up unsustainable debts building and operating a plant at Teesside. A debt for equity swap left shareholders with virtually nothing.
