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Board Of Directors' Report At TORM A/S' Annual General Meeting On 11 April 2013

Let me elaborate on the trends in the product tanker and bulk markets in order to put TORM's performance and situation into perspective.

Tanker Division

TORM's greatest exposure is to the product tanker market, and TORM's business model aims at maintaining a continued presence in the spot market - i.e. without long-term coverage - in order to be able to take advantage of the anticipated volatility and gradual market recovery. Short term, TORM will not seek higher coverage than the current levels, as the Company is of the opinion that there is an upside potential in the market.

Product tanker freight rates continued to be under pressure in 2012, as the markets continued to suffer from an oversupply of tonnage, some of it ordered back in 2007-2008. 2012 saw a net fleet growth of approximately 2%. Global economic growth indicators were sluggish, which hampered the global oil consumption and subsequently the refined oil product transportation. Total demand growth measured in dead weight tons in 2012 is estimated at approximately 3%. In comparison, the net fleet growth was approximately 4% in 2011 and the total demand growth was approximately 1%.

In the first quarter of 2012, the freight markets - for especially the larger segments (LRs) - continued at the low levels from end-2011. This was mainly due to reduced demand for naphtha in the East and temporary refinery closures in the Arabian Gulf. The freight rates for MR vessels were positively influenced by Brazilian imports and increasing ton-miles.

In the second quarter of 2012, the jet oil arbitrage opened to Europe, increasing the freight rates for LRs in the East. The MR freight rates were negatively affected in the West by a lack of arbitrage as well as weaker US East Coast demand.

In the third quarter of 2012, freight rates in the eastern market were stronger and LRs were supported by the increased amount of long haul cargo from the Arabian Gulf to Brazil and the naphtha trade in general, together with the distillate arbitrage from the Middle East to the West. The western market remained weak and MRs were impacted by planned refinery maintenance in Europe and continued limited diesel trade. A refinery explosion in Venezuela led to increased long haul trades from the US Gulf. MRs were positively impacted by new trades created by the permanent closures of refineries in Australia.

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