European Union biodiesel imports are rising sharply and the bloc's own 2011 production of the fuel is likely to fall partly because of heated competition from outside supplies, Hamburg-based oilseeds analysts Oil World forecast on Tuesday. "EU imports of biodiesel have increased sharply so far this year and will probably reach a record 2.52 million tonnes in January/December 2011, up 21 percent from last year," Oil World said.

"We expect 1.4 million tonnes of biodiesel to arrive from Argentina and at least 830,000 tonnes from Indonesia and Singapore."

In 2010, the EU imported 1.1 million tonnes from Argentina and 516,000 tonnes from Indonesia and Singapore.

"Most of the imported biodiesel has been received in Italy and Spain," Oil World said.

EU 2011 biodiesel output is forecast by Oil World to fall to 9.07 million tonnes from 9.54 million tonnes last year partly because of the heated import competition.

Italy's 2011 biodiesel output is likely to fall 40 percent on the year to 450,000 tonnes, while Spain's is likely to drop 31 percent to 550,000 tonnes, it estimates.

Top producer Germany is likely to see 2011 output decline to 2.73 million tonnes from 2.80 million tonnes and output in second largest producer France will fall to 1.87 million tonnes from 1.98 million tonnes, it estimates.

The "alarmingly low levels" of EU biodiesel production capacity use has generated calls from Spanish and Italian producers for government support and measures to curb imports it said.

EU bioethanol producers on Monday called for an investigation into whether imports of U.S. bioethanol receive unfair subsidies.