Up then down

A JP Morgan analyst predicted Friday that 2010 will be a "tale of two halves" for the bulker sector as an iron ore run in the first half precedes a softer market.

But Jonathan Chappell raised his estimates for four US-listed dry-bulk companies and said recent drops in dry-bulk stock prices have overstated the impact of Chinese lending restrictions on imports.

Jonathan Chappell

"Despite a weaker-than-expected start to the year, we believe that iron ore imports will accelerate following Chinese New Year as steel mills look to re-build inventories prior to new annual prices that will likely be up materially from 2009 levels," the analyst said in a note to clients.

Chappell, who covers shipping stocks for his New York investment bank, also said Chinese coal imports should also stay robust.

But the analyst said the second half of 2010 should be "much softer" thanks to the impact of newbuilding deliveries and a slowing of trade as a result of less Chinese lending in the period.

Still, Chappell raised his 2010 estimates on four bulker owners on the back of a hike of 4% to 14% in projected time-charter rates during the year.

New York's Eagle Bulk Shipping received the biggest bump, with the supramax owner expected to post a loss of $0.10 this year instead of Chappell's prior forecast of $0.57.

Still, the analyst said he expects earnings declines in 2011, with Eagle and Genco Shipping & Trading taking the biggest hit because of the timing of time-charter expirations.

By Eric Martin in Stamford

Published: 15:53 GMT, 05 Feb 10 | updated: 15:53 GMT, 05 Feb 10