DryShips Inc. (DryShips) is a holding company that is engaged in the ocean transportation services of drybulk cargoes worldwide through the ownership and operation of the drybulk carrier vessels. As of December 31, 2007, they owned and operated a fleet of 38 vessels and eight new buildings consisting of nine Capesize drybulk carriers (including four new building Capesize drybulk carriers), 33 Panamax drybulk carriers (including two new building Panamax drybulk carriers), two new building Kamsarmax drybulk carriers and two Supramax drybulk carriers. Its fleet carries a variety of drybulk commodities, including major bulks, such as coal, iron ore and grains, and minor bulks, such as bauxite, phosphate, fertilizers and steel products. In addition to its owned fleet, DryShips has also chartered-in a Panamax drybulk carrier for a period of three years ending in December 2008. In July 2008, the Company acquired the 100% interest in Ocean Rig ASA. Primelead Ocean Rig is a drilling contractor in the area of offshore exploration, development and production, and operates two ultra deep-water drilling rigs, Leiv Eiriksson and Eirik Raude.
Most important to the performance of all shipping stocks is The Baltic Dry Index, which is a measure of bulk-shipping rates.  The Baltic Dry index directly corresponds to the price of all shipping stocks as it dictates rates. The index reached a record high on May 20 and has since plunged 58 percent, partly because China shut factories and steel mills around Beijing to curb pollution during the Olympics. Rates on capesize vessels — those so big they must go around the Cape of Good Hope and Cape Horn rather than through the Suez and Panama canals — rose 2.3%, to $67,554 a day, up from $66,038, although the rates are down 5.5% from $71,478 last week. Last year at this time, capesize rates were $129,876.Moreover, Chinese steelmakers this week rejected the mid-year price increase request from Brazilian iron ore producer Vale.  China Iron and Steel Association said Chinese steelmakers, including major firms such as Baoshan Steel and Wuhan Iron & Steel, will not import iron ore from Vale in the short term due to the price dispute. Instead, these steelmakers are turning to domestic iron ore supplies, according to the association.

Reasons why increase:

1. Reinforced steel bars litter the ground in eastern Shanghai, where migrant workers in blue and orange uniforms are building a UFO-shaped performance center for the city’s 2010 World Expo. The building will use 20,000 tons of steel. In addition, China is constructing the world’s largest shipbuilding center, the longest high-speed railway and the biggest port.
2. The shipping industry may benefit from tightening credit markets caused by the bankruptcy of Lehman Brothers Holdings Inc. as limited financing for new ships may prevent overcapacity. Roslyn Ji, an analyst at Core Pacific-Yamaichi International Ltd. said in Beijing. The market meltdown will not stop construction in China
3. Low P/E 1.78, High EPS close to 20, steady dividend of .20 cents a share, high yield of 2.25%, and close to it’s 52 week low of 30.52, as opposed to its high of 131.34.
4. Iron ore stockpiles are accumulating at the loading ports in Western Australia and are chartering ships again after an eight-day hiatus and coal shipments should pick up as winter approaches.