Price of new ships is going down, and the proportion of advance payment from ship owners is becoming lower... Since the eruption of the international economic crisis, the shipping market has stayed in a recession.
Since 2011, there have been new trends in the international shipbuilding industry. New orders concentrate on maritime engineering equipments, large container ships, and liquefied natural gas ships; Chinese shipbuilding enterprises, however, lack necessary technologies and construction advantages in these fields, and many big orders have been taken away by countries like South Korea and Singapore.
According to statistics from CANSI (China Association of the National Shipbuilding Industry), from January to October 2012, China completed a shipbuilding quantity of 46.67 million DWT, down 15.5 percent year on year, exported ships accounting for 83.2 percent of total; the quantity of new shipbuilding orders was 16.42 million DWT, down 44.8 percent year on year, exported ships accounting for 79.7 percent of total. As of the end of October, the quantity of orders in process was 116.63 million DWT, down 29.5 percent year on year, and 22.2 percent lower than the quantity of orders in process at the end of 2011, exported ships accounting for 83.5 percent of total.
Under the circumstance, the ability to provide financing support to ship owners becomes an essential factor for China's shipbuilders to obtain orders.
Faced with the difficulty of the shipbuilding industry, the Export-Import Bank of China, being a policy financial institution, will take giving support to the development of China's shipbuilding industry and shipping industry as its business focus, giving more help to Chinese shipyards to gain more new orders and deliver ships smoothly.
In its broad sense, shipbuilding financing refers to all financial services related to shipping products. The shipbuilding financing business of the Export-Import Bank of China, in its traditional sense, includes ship supplier's credit, exported ship buyer's credit, and advance payment guarantee.
In recent years, on the basic of its traditional shipbuilding financing credit business, the Export-Import Bank of China has launched coastal and riparian ship buyer financing business, fixed assets investment loan for ship exporting enterprises, loans for ship exporting bases, circulating capital loan for domestic oceangoing vessels and maritime engineering equipments for the domestic market, ship import loans, underwriting of debt financing tools for non-financial enterprises (bridge loan), ship leasing financing loans, shipbuilding enterprises merger loans and supply chain logistics financing and other new type of loan business, and ship export and import guarantee, letter of credit, and international and domestic settlement and other intermediary business. These new varieties of loans play a positive role in expanding demands for domestic shipping capacity and promoting the further development of main shipyards.
Among these, the Export-Import Bank of China makes the best use of the main channel function of its shipbuilding industry financing business, increases support to ship export buyer credit, and help domestic shipyards to gain more shipbuilding orders through the model of "financing to attract new orders". Meanwhile, the Export-Import Bank of China makes active effort to adjust its credit loan policy and guide shipyards to accelerate the pace of industrial structure adjustment and increase competitiveness by supporting shipyards to undertake building ships that are of high technology content and high added value.
It is learned that the Export-Import Bank of China's financing super-large container ships and liquefied natural gas ships has broken South Korea's monopoly in super-large container ship building and helped Chinese shipbuilding enterprises, who had had no liquefied natural gas ship export order before, to achieve breakthrough in this aspect.
As for ship owners' abandoning orders, the Export-Import Bank of China helps domestic leasing companies to purchase abandoned ships and make vigorous attempts to help medium- and small-sized ship owners to solve their financing difficulties by providing backup leasing contracts or repurchase guarantee to shipyards or shipyards shareholders. The Export-Import Bank of China has helped many enterprises, including Sinopacific Shipbuilding Group and China National Aero-Technology Import and Export Corporation, to acquire orders for a number of ships.
In addition, the Export-Import Bank of China has launched full-scale cooperation with industrial mammoths like COSCO and China Shipping Company. The Export-Import Bank of China has signed RMB 60 billion Yuan bank-enterprise strategic cooperation agreements with COSCO and China Shipping respectively, sparing no effort to help domestic shipping companies to extricate from their predicaments.
Compared with commercial banks, the Export-Import Bank of China enjoys international credit rating equal to that of a national sovereignty. Shipbuilding loans given by the bank have large volume and long due time. Besides, after years of development, the bank has trained a group of professionals who are familiar with international ship owners and the shipbuilding market and established a professional financing team that covers ship such businesses as ship buyer's loan, ship seller's loan, intermediary businesses, and project evaluation, risk management, and industrial research and statistics analysis, putting itself in a leading position in China's shipbuilding financing field. As Liang Xiaolei, chairman of the board of Sinopacific Shipbuilding Group, said: "The Export-Import Bank of China is the wind vane of the shipbuilding financing market. Projects that they recognize tend to be well received across the industry".