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DryShips Inc. (NDAQ: DRYS) and Diana Shipping Inc. (NYSE: DSX) shares moved higher today after a key competitor announced that it would acquire six drybulk new-builds for $530 million. Genco Shipping & Trading has agreed to purchase the new drybulk ships in a deal that instilled confidence within investors who were recently shaken up by a sharp drop in spot prices.

Last week, a key shipping index measuring drybulk vessel activity posted its largest one-day drop and dragged down rates for the sector's biggest ships. The Baltic Dry Index lost 963 points last Thursday to reach 10,142 after hitting an all-time high of 11,793 in May. The largest drop was in Capesize vessels, which sank 16 percent in one day. Rates have since recovered slightly, but remain well below historic standards.

Analysts believe that the issues facing the drybulk industry are only temporary. Dahlman Rose & Company noted that the volume of new spot fixtures has been exceedingly low as of late; spot prices are up more than 100% since last year alone. It is also important to note that there are many types of companies in the drybulk industry. DryShips, for instance, only leases at spot rates while others prefer long-term contracts.

The recent purchase by Genco has further solidified the belief that the issues facing the drybulk industry are only temporary. There is little evidence to support the notion of a slowdown in the commodities market - which constitutes a large portion of drybulk shipments. Rather, China has only slightly slowed its imports as they try and use more domestic coal and natural resources.

In the end, demand from foreign nations for commodities will only keep drybulk spot prices high. The recent drop can be attributed to a series of bearish signs in the near-term, but the long-term is still very bullish, according to many industry analysts. Genco's purchase today only improved upon those beliefs and sent industry shares higher on the day.

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