A tentative increase in freight rates and decreasing net fleet growth point to gradual recovery from next year in the dry bulk freight market, but it will be fragile and owners should resist the temptation of cheap newbuildings to allow the market to rebalance. Since the beginning of the year, rates on the iron ore benchmark Capesize route from Tubarao, Brazil, to Qingdao, China have increased by $2.25/t from $17.25 to $19.50/t. And coal freight Capesize rates for Richards Bay to Rotterdam voyage increased to around $8/t in June from $5.90/t in April.

But, as oversupply is the main challenge to the dry bulk shipping sector, it is a slowdown in global fleet expansion that is really exciting hopes of recovery. The global dry bulk fleet grew by 11pc in 2012, with 97.3mn dwt delivered, according to shipbroker Banchero Costa. “But the peak seems to be behind us now. In the first five months of 2013, 38pc fewer vessels were delivered compared to the same period last year,” Banchero Costa said. The net fleet growth could be as low as 6pc in 2013, its lowest level since 2008.

But newbuilding prices have more than halved since 2008 and this could lure shipowners into ordering more vessels. “Low asset values could tempt some players to buy more ships or attract new entrants,” ratings agency Moody's said in its shipping industry outlook in June. Shipping companies placed 20 new vessels orders in the last week of April, Moody's said. And, although most of these orders are believed to be speculative, it raises questions about “when the supply-demand imbalance will be redressed”.

Asked if shipowners should refrain from buying new vessels, Wilhelmsen Ships Service business director Frederic Fontarosa told Argus that if shipping was a homogenous entity working to a common good then the answer would be yes. “But shipowners do not tend to see shipping as a team sport,” he added.

“A bargain is a bargain, and as current prices are so low it is hard to turn out an opportunity to refresh your fleet,” Fontarosa said. There has also been increased buying by Greek owners “and the traditional response is that they buy at the bottom of the market, so other [owners] tend to follow on the basis that they have always been right in the past,” Fontarosa said.

But, according to Greek shipowner Safbulk, the days when people were buying purely on instincts are gone. “Nobody can foresee where the market will be in 2014, 2015 or even today but we can be sure that if owners order more vessels the recovery will be delayed,” Safbulk chartering director George Kalogeropoulos told Argus.

“In my opinion, we should sit back and try and make money from the existing fleet and gradually, as the recovery arrives, think about ordering newbuildings. The mistakes made in 2008 should not be repeated,” Kalogeropoulos said.

Moody's vice president and analyst Marco Vetulli concurs, saying that at this stage the most important issue for the industry should be to regain negotiating power and, in the current oversupplied market, that task is difficult.

“We have to bear in mind that the market is still depressed and even if timecharter rates are increasing, reaching around $10,000/d for capesizes, these levels barely cover the vessels' operating costs which roughly stand around $18,000/d [depending on the ship characteristics],” Total coal arm Total Gas and Power's coal shipping manager François Sinibardy told Argus.

In June, Moody's maintained its negative outlook for the global shipping industry with the view that the market will remain oversupplied in most shipping sectors. The agency said it would consider changing the outlook if “global supply exceeds demand by no more than 2pc”. Global supply currently surpasses demand by 25pc, Moody's told Argus.

“The freight rates are currently at a very low level, so I think it is reasonable to think that at the end of 2014 we could see a rebound, but I expect the recovery will be slow,” Moody's Vetulli said.