US Export-Import Bank has granted a US$20mn working capital loan guarantee to Retech Systems, a small Californian firm, to help support its exports to China.

Retech is considered as one of the leading manufacturers of advanced thermal-processing equipment and will be using the facility to export its metals processing equipment to Shanghai Baoshan Iron & Steel.

United Commercial Bank of San Francisco is acting as the guaranteed lender and will provide the funds to support three export contracts between Retech Systems and Baoshan. The equipment provided by Retech will be used to increase the Chinese firm’s output of titanium which will be sold to the domestic market.

Retech has established a strong relationship with US Ex-Im over the last five years, with the bank having assisted on various global contracts worth over US$55 million.

Under the terms of the three Baoshan contracts, Retech Systems will manufacture an electron-beam furnace, a plasma-arc melting furnace and a plasma welder. The equipment will produce titanium ingots, which will be used to manufacture products for a wide range of industries.

During the equipment manufacturing process Retech Systems will receive advance and milestone payments from Baoshan. The working capital facility will be mainly used to allow Retech to issue standby letters of credit to Baoshan as prepayment guarantees, as well as other general working capital needs related to the three contracts. US Ex-Im’s guarantee programme typically provides a 90% guarantee for the working capital loan, including principal and interest.

Exports account for 50% of the Retech’s total sales volume, and it exports to 16 international markets. United Commercial Bank is a subsidiary of UCBN Holdings, and specialises in serving the Asian-American community and facilitating trade between the US and China.