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Third Quarter Report 2010

The number of earning days for the Bulk Division was 5% lower in the third quarter of 2010 than in the same period last year due to the sale of vessels.

The dry bulk market continued to be volatile during the third quarter of 2010. The decline in rates that commenced in mid-May continued until the end of July when rates bottomed out at USD/day 16,000. Then rates increased until mid-September, peaking at USD/day 27,300 with a subsequent levelling off to USD/day 22,200 by the end of the quarter.

Chinese demand for coal and iron ore continued to be the main driver in the dry bulk market. The rate decrease experienced at the end of the second and going into the third quarters was driven by uncertainty surrounding future Chinese demand for iron ore. Subsequently, this concern eased off, which in combination with the Russian grain export ban, implying longer ton mileage, supported the freight rates.

The dry bulk fleet grew by net 4% during the third quarter, bringing fleet growth to net 12% year-to-date.

As TORM seeks coverage of earning days for the Bulk Division, the volatility in bulk spot rates has limited impact on TORM's earnings in 2010.

At 30 September, coverage for the remaining part of 2010 was 87% at USD/day 19,791.
Bulk Division Q3 09 Q4 09 Q1 10 Q210 Q3 10 Change 12-month
            Q3 09 avg.
            - Q3 10   
Panamax (60-80,000 DWT)              
Available earning days  1,255  1,204  1,119  1,060  1,189 -5%  
TCE per earning day 1)  17,968  19,690  18,298  18,611  20,418 14%  19,254
Operating days  392  368  315  182  184 -53%  
Operating expenses per operating day 2)  4,477  4,066  5,187  4,603  4,297 -4%  4,538
1) TCE = Time Charter Equivalent Earnings = Gross freight income less bunkers, commissions and port expenses.
2) Operating expenses are related to owned vessels.              

Other activities

Other (non-allocated) activities were a loss on investments in jointly controlled entities of USD 3 million, financial expenses of USD 14 million and tax of USD 0 million.

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