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Second Quarter Report 2012

Stocks in this article: TORM TRMD

In the East, the freight rates for LR2 and LR1 vessels increased during June mainly due to the jet oil arbitrage opening to Europe, which also had positive spill-over effects on the activities in the Arabian Gulf. Palm oil exports from Indonesia climbed ~10% in June compared to May, but the overall palm oil exports have declined since the end of 2008, mainly due to the European financial crisis and subsequent lower demand.

The global product tanker fleet grew by ~1% in the second quarter of 2012 (source: SSY). In general, the markets are still suffering from tonnage oversupply.

The Tanker division's results continued to be adversely affected by TORM's financial situation. However, the Company outperformed spot benchmarks across all segments; but, the general market sentiment in the second quarter of 2012 was weaker than last year. TORM achieved LR2 spot rates of USD/day 10,206 in the second quarter of 2012, which was at the same level as in the second quarter last year. The segment is still affected by substitution from the Aframax and Suezmax newbuildings and general oversupply of tonnage. The LR1 spot rates were at USD/day 11,237, down by 26% year-on-year, and TORM's largest segment (MR) was at USD/day 11,510, down by 25% year-on-year. The Handysize spot rates were at USD/day 10,939, down by 18% year-onyear.

The Tanker Division's operating loss for the second quarter of 2012 was USD 42 million, compared to a gain of USD 1 million in the same period 2011. Mark-to-market effects were negative with USD 1 million.

Q4 11 Q1 12 Q2 12 Change

Q2 11

- Q2 12

LR2 (Aframax, 90-110,000 DWT)

Available earning days 1,153 1,158 1,092 899 854 -26%

Spot rates1) 10,612 10,836 11,959 10,814 10,206 -4%

TCE per earning day2) 12,542 12,423 15,647 7,865 14,157 13% 12,649

Operating days 1,183 1,196 1,121 1,001 1,001 -15%

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