China Exim Bank to Increase Shipping Loans to $14bn in 2013

Monday April 15, 2013

The Export-Import Bank of China (China Exim Bank) is expecting to boost its loans to the shipping industry by $2 billion this year to a total of $14 billion, Chen Bin, the bank's deputy general manager, transport finance department, has told pan-Asia weekly Seatrade Asia Week.

The bank was said to have inked around $12 billion of deals last year, and Chen said they have a lot of deals currently under consideration.

"We believe that the committed amount may increase this year by more than $2bn," said Chen.

Chen said the current downturn in global shipping has presented opportunities for the bank, noting that some shipowners want to take advantage of the current low newbuilding prices and feel those prices will only go up in the future.

"When the market is slow, we may actually make fewer mistakes. But when the market is high we should be more cautious," said Chen, adding that during a boom market vessel values may be overestimated to "illogical levels."

Shipowners spending big on newbuilds in recent months include Scorpio Tankers Inc. [NYSE:SNG] (Scorpio), who have 39 new vessels currently on order, and John Fredriksen's Frontline 2012 Ltd. (Frontline 2012) who last month almost doubled its orders for new ships to 53, representing a decision to invest $2.6 billion in new, fuel-efficient vessels.

Mats Berglund, CEO of dry bulk operator Pacific Basin Shipping also thinks prices are "definitely not going down," but said in March that buying second hand vessels offers a "better return on capital" than more fuel-efficient newbuilds.