THE dry bulk downturn has been declared officially over for now and US-listed firms are back in expansion mode. During this week’s Capital Link event, many dry bulk executives were bullish based on the perception of improved supply-demand fundamentals.

Underlining the confidence were the recent acquisitions made by Eagle Bulk and Golden Ocean (news, data), while some of their peers, including Euroseas and DryShips, have also stated their intent to expand their fleets.

The optimism comes as the Baltic Dry Index rose to 1,205 points on Monday, the highest in around four months, but still far below previous peaks seen during the two upcycles earlier this decade of no less than 2,000 points.

Secondhand prices for a five-year-old capesize vessel have increased 34.7% over the past year to $32m, panamax prices have risen by 34.6% to $17.5m and handymax prices by 33.3% to $16m, according to Clarksons data, but these values are still low by historical standards.

“We think this is the beginning of market recovery,” Genco Shipping & Trading president John Wodensmith told Lloyd’s List. “It is still the time to expand and grow.”

China’s coal and iron imports have continued to show healthy growth so far this year, while shipments of minor bulks and grains also remained healthy, according to some executives.

Looking further ahead, the brightening outlook for global economic growth has infused market participants with greater confidence.

“Demand will… just blow over everything on the supply side,” Scorpio Bulkers (news, data) president Robert Bugbee said. “Customers are across the board” for time charters, indicating confidence in the market for the next couple of years, he added.

Oversupply worries have also eased, with the size of the global orderbook shrinking on a lack of newbuilding orders. According to Lloyd’s List Intelligence, the capesize orderbook accounted for 2.7% of the existing fleet as of March 9 this year when vessels above 200,000 dwt were excluded, compared with the year-ago level of 7.3%. The portion of the kamsarmax orderbook fell to 11.4% from 21.6%, while that for handymaxes dropped to 9.8% from 18.8%.

However, with secondhand prices nearing newbuilding prices after recent increases, some executives expressed concerns over any resumption in newbuilding orders — which would end the upcycle prematurely. “Every single time we have a down cycle it is because of over-ordering,” said Mr Wodensmith.

In 2012-2013, private equity firms flooded the market with bulker newbuildings, leading to the severe oversupply that eventually pushed freight rates down to record lows last year. As for whether the dry bulk spectrum would once again experience another ordering spree, opinions were mixed. Some noted tight bank lending and limited downside in newbuilding prices would curb newbuilding deals. “There is scarcity of capital,” Euroseas chairman and chief executive Aristides Pittas said.

Mr Bugbee, who noted that discussions over the next cycle could be premature, said: “When market comes up, capital will come in. No lesson will be learned. We are just off to another great cycle in shipping.”