Left behind at the docks while the broader equity markets sailed into rallyville, the dry bulk sector is bound to steer into some relative strength at some point ... right?

In a word: yes.

Although the sizeable overhang of excess supply in the world's dry bulk fleet has exerted immense forces against the shares of dry bulk shippers, the strongest operators among them are finally showing signs that this shipwrecked sector is preparing to get under way.

Diana Shipping (NYSE: DSX) beat expectations this week with first-quarter profit of $28.8 million. Absorbing a further 8% decline in the average daily charter rate, from already impaired prior-year levels, Diana sustained revenue of more than $62 million by virtue of a steady fleet expansion that added 10% to available operating days. More importantly, Diana's addition of three new vessels since last year coincided with a restoration of the near-perfect fleet utilization rates we witnessed before the perfect storm. That expansion is just the beginning; according to one recent analyst report, Diana "has the ability to double its fleet without external equity."

Forging a strategic move into ships of ultra-massive scale with the well-priced purchase order for two 206,000-deadweight-ton Newcastlemax carriers, Diana has begun to transmit its long-awaited signal that the coast may be clearing. Notwithstanding the potential 40% resource tax in Australia that has mining investors concerned, these huge ships fulfill the pan-Asian demand for seaborne coal with a cost efficiency that surpasses even the popular Capesize carriers. These unrivaled behemoths are purpose-built to serve the expanding coal export capacity that miners BHP Billiton (NYSE: BHP), Peabody Energy (NYSE: BTU), and Yanzhou Coal Mining (NYSE: YZC) have joined forces to build in Newcastle.

Meanwhile, just as the equity markets began to crest, and it seemed nothing was on the rise, the Baltic Dry Index (BDI) -- an index of prevailing dry bulk charter rates -- initiated a huge surge that has yielded a 40% increase in charter rates just during the past month. Now, given the disruptive oversupply of vessels, I don't view the BDI as the reliable economic indicator it's customarily interpreted to be. However, it's certainly a welcome sign for shippers that spot rates are showing significant strength. It's possible to infer, furthermore, that perhaps Asian demand for commodities has not ebbed to the extent that recent declines in the region's stock markets might suggest.

Looking back over the past couple of years, the dry bulk stocks that I have highlighted as relative outperformers have stood the test of time. Diana Shipping, in my unwavering opinion, remains the queen of the fleet, while Navios Maritime Holdings (NYSE: NM) and Genco Shipping & Trading (NYSE: GNK) are worthy of an extended look. At the opposite end of the spectrum, Fools are strongly encouraged to resist the urge to speculate on the ultimate fate of DryShips (Nasdaq: DRYS).

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