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Nordic Union Bank said the global shipping downturn is expected to end

  According to Bloomberg, as the largest lender in Scandinavia, the Nordic Union Bank recently said that the shipping industry is expected to recover from the worst crisis from next year due to the recent rising global demand, freight rates and ship asset prices.
Hans kjelsrud, head of the shipping department of the Nordic Union Bank, said that although the shipping industry will remain depressed in 2013, the market situation is expected to gradually improve in 2014. After 2013, the delivery volume of new ships will be greatly reduced, and it is believed that the performance of the shipping industry will be better and better after 2014.
The Nordic union bank is the fifth largest shipping bank in the world. Although European banks, such as German commercial banks, chose to exit when the shipping industry was in the worst decline, the Nordic union bank still faithfully supported the industry. At present, the downturn of the shipping industry has lasted for five years. The sudden drop in demand and excess transport capacity brought by the European debt crisis, as well as the low freight rate, high fuel price and the decline of ship price, etc. have brought a significant blow to the shipping industry.
The Clarkson sea index has always been an important measure of shipping revenue. According to Clarkson, a ship broker, the index averaged $9187 a day this year, the lowest level since 1990. Clarkson and Fearnley consultants, the Oslo maritime research company, also said that the bulk carrier fleet and the VLCC fleet are also experiencing the most serious overcapacity since the 1980s. However, kjelsrud said the shipping industry has shown signs of improvement as the global economy continues to recover.
Increase in ship value
Kjelsrud pointed out that at present, the U.S. economy is recovering, while the uncertainty of China's economy has disappeared earlier this year, and the European economy is bottoming out. The global economic growth has obviously brought the increase of freight volume, and the rise of freight rate will often promote the rise of ship price.
According to the relevant data of Clarkson's second-hand ship price, the rise of ship value in August increased by 2.9%, the largest increase since February 2011. The price of five-year-old Capesize bulk carriers has risen 14 per cent this year to $33.5 million, according to the bourse. In 2008, the price of this type of ship was as high as $153.8 million. Ship prices have been falling, to a 10-year low of just $29.5 million earlier this year.
Decrease in loan losses
Kjelsrud said that in the past three to six months, the cost of new ships has picked up and the value of ships is expected to increase accordingly. Based on the bank's observation and analysis, the price of second-hand ships of most major ship types has bottomed out.
The increase of ship asset price helps to reduce the loss of shipping bank. In the second quarter, loan losses in the shipping sector of the Nordic Union Bank fell 15% from the first quarter, the smallest since the third quarter of 2011. In July, Christian Clausen, the bank's chief executive, said that the bank's operating profit had reached its highest level in seven quarters, while the loan losses of the shipping business were further reduced.
DNB, the world's third-largest shipping bank, previously announced loan losses of NOK 198 million (US $34 million) in the second quarter. Loan losses fell 43% from the first quarter of this year, the lowest in four quarters.
These improvements have led some banks to return to the ship financing market. Kjelsrud said that the financing loans of shipping banks are more active, and the liquidity in the shipping market is more abundant. This is crucial to the increase of ship prices. He believes that it is difficult for the ship trading market to operate well without financing. Shipowners need to obtain financing to purchase ships, and if there is no financing, the ship trading market will not be active.


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