Shares of dry bulk shippers are on the move today after JP Morgan said the recovery in the space is "real." Dry bulk shippers move commodity cargo that is not packaged and shipped in large quantities, typically things like petroleum/crude oil, iron ore grain, agricultural products, coal, gravel and other materials globally. Today's constructive view of the sector follows a similarly positive tone from Morgan Stanley last week. The sentiment towards the sector has steadily improved over the last year.

BOTTOM IN: Last year may have been the worst year ever for the dry bulk shippers as the Baltic Dry Index fell to historic lows in February 2016. Industry experts cited an over supply of vessels due to Chinese demand in the years leading up to the Financial Crisis. That oversupply of vessels combined with a drop in China's imports of iron ore and coal culminated in the 2016 low. In late March, Morgan Stanley went to an Overweight on Star Bulk (SBLK) and Golden Ocean Group (GOGL) and tagged Safe Bulkers (SB) to Overweight from Equal Weight. Morgan Stanley analyst Fotis Giannakoulis cited, most notably, the recovery in global steel markets. The analyst also pointed out that he sees long-term fleet growth of only 1% and growing Chinese infrastructure spending, which will lead to steel demand. In November, The Wall Street Journal wrote that "The darkest days may be over for the dry bulk shipping companies that transport the raw materials of global trade." The article cited the thoughts of Harry Vafias, a ship owner, who said the recovery in dry bulk shipping is due to a decrease in new ship orders and more scrapping activity. "The election of Donald Trump is also lifting spirits," Vafias said, according to the WSJ.

RECOVERY IS REAL: In a note out this morning, JPMorgan analyst Noah Parquette upgraded Diana Shipping (DSX) to Overweight, saying the recovery in dry bulk shipping "is real and can be sustained for some time." The analyst sees "plenty of runway" for rates to continue to strengthen. He has an $8 price target for the shares. Parquette this morning also upgraded Golden Ocean to Overweight and doubled his price target for top pick Star Bulk Carriers to $20 from $10.

PRICE ACTION: Shares of dry bulk shippers are all moving higher this afternoon, with Diana Shipping up 12% to $5.92, Golden Ocean up 5% to $8.77, Safe Bulkers up 3.3% to $2.49 and Star Bulk Carriers popping 2% to $12.37.