(Dry-bulk shipping 2010 preview updated to reflect changes to stocks and underlying fundamentals of the dry-bulk shipping sector.)NEW YORK ( TheStreet) -- It may have been the most harrowing period in merchant shipping since German U-boats prowled the lanes of the North Atlantic during World War II. Anyone who follows the dry-bulk shipping industry knows the story: the worldwide banking-system meltdown in late 2008 yanked ship financing out from under the business. The global economic recession yanked out demand. Asset values plunged; so did shipping rates. The months that followed in 2009 were wild for the dry-bulk sector, with a Chinese stimulus package rejuvenating its need for raw materials, including iron-ore -- the stuff on which most bulk carriers base their very existence -- to such a level that, during the summer and then again in late fall, shipping rates surged, then fell back again as buying patterns among steelmakers in the People's Republic ebbed and flowed. Now, with the dry-bulk trade ready to tear December's page from the calendar, two "huge wildcards," in the words of one analyst, face these companies, which are often used as a proxy for the health of world commerce at large. The wildcards are well known, and can be summed up in two words: Supply and demand. Or, more specifically, two further words: Newbuildings and China. As for the latter, it's a matter of whether the world's third-largest economy will continue importing raw materials at the record pace of the last few months. The bulls say yes, pointing to widespread predictions of 9% GDP growth for China in 2010, which would follow an expected 8% expansion in 2009. Such growth, the optimists argue, would keep the Chinese steel furnaces blazing and the enormous capesize iron-ore haulers steaming briskly en route to Shanghai and other big Mainland ore ports. The bears, however, wonder whether the authorities in Beijing may try to curb overcapacity. And they wonder whether iron-ore imports will match the heady levels of 2009. As for the supply side, there's the widespread batten-the-hatches fear of a coming glut to contend with. With all this as a backdrop, here's a brief breakdown of how five dry-bulk companies might fare in 2010.
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