NEW YORK (TheStreet) -- Dry-bulk shipping stocks rose sharply Tuesday as bullish sentiment appeared to reenter the sector and spot-market rates for bulk maritime transport strengthened a bit.On Tuesday, the Baltic Dry Index, a measure of spot shipping prices across vessel sizes, rose 1.2%. The going rate for a capesize ship, the biggest dry-bulk carriers in the world, jumped 4% to nearly $31,000 a day -- a rate that has remained basically flat since the beginning of the month. Shares of Genco Shipping & Trading ( GNK - Get Report) led the charge Tuesday, spiking 9.8% to $20.89. The company has a greater exposure to spot rates than many of its peers, which have booked much of their fleets into charters that cover periods of a year or more. Genco, on the other hand, can benefit when short-term rates jump. But as a quick check of the short interest demonstrates (as of Jan. 29, short sellers held nearly 28% of Genco's float), a dose of brighter news can sometimes induce a short squeeze, sharpening the ascent of these volatile stocks. Indeed, the bears and the shorts still have their arguments, none more potent than oversupply, with an armada of new ships scheduled to enter service this year. Others believe that China simply can't keep importing raw materials (and using dry bulk ships to carry them) at the historic pace seen last year -- especially since the country's banking authorities began a much ballyhooed effort to tamp down on loose lending. But those appear to be long-term concerns. Over the short term, the Chinese New Year festivities have quieted the normally brisk Australia-to-China coal and iron-ore runs.
Meanwhile, the world's big three miners -- BHP Billiton ( BHP), Vale ( VALE) and Rio Tinto ( RTP) -- continue to negotiate with Chinese buyers for their annual iron-ore price contract. Rumors have pegged an increase of 40% over last year's depressed rate -- with some outlandish guesses calling for a 60% hike -- but nothing official has emerged. Dry-bulk bulls think the coming price hike will cause another rash of Chinese buying, which would push shipping rates higher. But so far that has yet to occur. As a backdrop to all this, shipping companies with U.S.-listed shares have entered their February fourth-quarter earnings season. Most of these outfits will release results later this month; because of record Chinese importation during the last part of 2009, most analysts expect a relatively strong showing. Other stocks pacing the gainers in the dry-bulk sector Tuesday were shares of Navios Maritime ( NM - Get Report), which added 7.7% to $6.31; Eagle Bulk Shipping ( EGLE - Get Report), which spiked nearly 7.1% to $5.26; and Excel Maritime ( EXM), up 8.2% to $5.70. DryShips' ( DRYS) stock rose 3.7% to $5.64 on lighter-than-average volume, while Diana Shipping ( DSX - Get Report) jumped nearly 5% to $14.33. -- Written by Scott Eden in New York