Of course, stocks in the sector have risen in the last few sessions along with the broader market. Industry stalwarts DryShips ( DRYS), Diana Shipping ( DSX), Genco Shipping & Trading ( GNK) and Excel Maritime ( EXM) have all seen their shares come off year lows in recent trading sessions. >>Vote in Our Poll: Which Dry Bulk Shipping Stock Will Win? On the spot market, the plunge in day rates for Capesize ships, the biggest bulk carriers on the high seas, was particularly severe. After touching nearly $60,000 a day in early June, Capesize rates began their prolonged sink, not stopping until last week and falling as low as $12,000 a day. The break-even level for these ships is around $8,000 to $10,000 a day, excluding interest costs and the like. The reasons for the decline are well-known: a kind of supply-demand double whammy developed in early summer. On the supply side, there were two negative factors. Congestion at key iron ore ports in China, Australia and Brazil has eased, unleashing free Capesize ships onto the market. More worrisomely, a steady drip of freshly built ships has continued to increase the size of the overall global dry bulk fleet across ship categories, though the Capesize market has been hurt much more so than smaller vessel classes. On a deadweight-ton basis, the worldwide fleet has grown by more than 6% since the beginning of the year, according to Clarksons, the London ship broker. The Capesize fleet, meanwhile, has surged by nearly 9%, adding more than 110 ships since the end of 2009. "Only the Capes are being hurt significantly by the supply situation," said Jeffrey Landsberg, an independent dry-bulk industry analyst in New York. On the demand side, Chinese steelmakers all but stopped importing iron ore. The reasons were two-fold: a slower-growing Chinese economy that was down-shifted by government officials afraid of asset bubbles, and the rising cost of raw materials. Because iron ore prices shot so high earlier in the year, steelmakers began buying domestically produced iron ore, which is cheaper. In June, Chinese mines churned out more of the crucial steel ingredient than they ever had in any month before, the second straight monthly record. Meanwhile, with domestic demand for steel easing back because of the fiscal and monetary moves by the government, steel prices weakened, squeezing margins and forcing steelmakers to reduce outpout.
NEW YORK ( TheStreet) -- It's been a wild few months for the dry-bulk shipping industry, which has suffered as rates for its ocean-bound services have plunged to levels not seen since the depths of the financial crisis in early 2009.
But with most of the sector's publicly traded companies ready to report second-quarter results in the coming days and weeks, it looks as though the market may have bottomed out. Some investors and analysts say dry-bulk stocks have been oversold amid the most-recent rates collapse, and that recent strength in most of these shares indicates a burgeoning bulk-shipper rally.
Baltic Dry Index, 12-Month