Weak daily freight rates remain a headwind for tanker companies, while dry cargo operators will likely see some upside as minor bulks and coal drove up rates for smaller vessels in July-September. The Baltic Exchange’s main sea freight index—which gauges the cost of shipping major bulks like iron ore and coal, and minor bulks from fertilizer to cement—is down by a quarter this year, though it has rallied from July’s 17-month low. Spot rates for smaller dry cargo vessels such as panamaxes and handymaxes were boosted last quarter by continued strength in trade in coal, minor bulks and grain, while rates for capesizes—the biggest class of dry bulk ships—were rangebound due to a volatile iron ore market. Time-charter driven shippers such as DryShips , Diana Shipping and Safe Bulkers should post results in line with expectations, according to StarMine SmartEstimates, which put more weight on recent forecasts of top-rated analysts. Earnings at handymax-focused Eagle Bulk Shipping are predicted to beat the mean estimate by 7 percent, while Genco Shipping & Trading earnings are seen 4 percent below the mean forecast. Spot-market driven tankers are likely to lag as rates for most vessel classes hit year-lows during the quarter, with rates for very large crude carriers, suezmaxes and aframaxes falling by more than half sequentially. “While demand (from) the East has continued to show signs of strong growth, it remains weak from major oil consumers in the West, resulting in shorter sailing distances,” said Oppenheimer analyst Scott Burk. Crude Carriers Corp , Teekay Corp , Overseas Shipholding Group and Nordic American Tankers Shipping are likely to come in some way below the mean estimate, according to SmartEstimates. Rate Squeeze “Despite the sustained gradual recovery in global oil demand, continuing OPEC cutbacks combined with the discharge of floating storage and seasonal summer effects put downward pressure on tanker rates,” John Tavlarios, president of General Maritime, said on a conference call. “Our current supply/demand model suggests tanker rates will remain depressed in 2011,” said Oppenheimer’s Burk. Buoyed by demand for minor bulks, smaller vessels will outperform capesizes, which are being squeezed by ship oversupply and China’s choppy iron ore market. An 18 percent sequential rise in Chinese iron ore imports in September cheered the dry bulk segment, but the tanker market is still seeking a near-term catalyst. Jefferies cut its estimates for fourth-quarter dry bulk rates to reflect slightly a dip in iron ore demand expectations as many Chinese steel mills aim to reduce electricity consumption to comply with government mandated energy consumption goals. “The dry bulk freight market right now is fairly strong, while the international crude tanker market is very weak,” said Gregory Lewis, analyst at Credit Suisse.