PREVIEW-Dry bulk Q3 to be mostly in line with estimates

* Long-term contracts to weigh on Q3 results

* DryShips kicks off earnings, to report after-market Oct. 26

* Genco expected to beat, Diana seen in-line with est

* Analysts mixed on Q4 prospects

By Hezron Selvi

BANGALORE, Oct 26 (Reuters) - There will be little surprise in third-quarter earnings for most dry bulk shippers as long-term contracts restrict them from capitalizing on the strength in spot charter rates.

Over the last year, dry bulk shipping companies have increased their fleet's long-term contract coverage in a bid to lower their exposure to the volatile spot charter markets.

However, charter rates in the spot market have been stabilizing after a prolonged recession, the worst since the Great Depression of the 1930s.

"For the dry bulk industry, the day rates for the third quarter were better than what we had anticipated," Oppenheimer & Co analyst Scott Burk said.

The analyst noted that actual dry bulk day rates during the third quarter were 19 percent above his forecast, with rates for Panamax and Handymax vessels largely responsible for the upside due to the seasonal strength in coal and grain trades.

"But again, similar to the last quarter, most of the companies' day rates had already been locked-in going into the quarter," Burk said, adding that he expects most of them to report in-line results.

BB&T Capital Markets analyst Kevin Sterling also believes the majority of dry bulk shippers will report third-quarter results in-line with expectations, given the contracted nature of their revenue stream.

"I am not looking for any major deviations or surprises to the upside or downside," he said.

DryShips Inc (DRYS.O), which has been aggressively increasing its long-term charter coverage, will report its third-quarter results after the market closes on Oct. 26, kicking off the sector's earnings season.

Analysts, on average, are expecting DryShips to report third-quarter earnings of 20 cents a share, before special items, on revenue of $210.7 million, according to Thomson Reuters I/B/E/S.

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