The fourth quarter of 2012 showed a positive development in MR freight rates in the West triggered by hurricane Sandy and refinery outages on the US West Coast, which positively impacted the ton-miles factor through an increased product flow from the US Gulf and the Far East. The eastern market was positively impacted by increased naphtha and ethylene demand, distillate arbitrage to Europe and internal arbitrage in the Far East.Despite TORM's challenging financial position, TORM once again outperformed the commercial spot benchmarks by 12%, 10% and 32% for LR2, LR1 and MR, respectively. This was due to TORM's strong customer relations and the Company's scale effects. The Tanker Division's EBIT before restructuring effects was a loss for 2012 of USD 156 million before impairment losses of USD 74 million, compared to a loss of USD 107 million before impairment losses in 2011. The loss for 2012 includes a net loss of USD 16 million from the sale of two vessels and the cancellation of one newbuilding order. The result is clearly unsatisfactory. In 2012, the market conditions impacted both product tanker newbuilding prices and resale values, causing further pressure on vessel values. This was particularly the situation for LR2 vessels, with the estimated value of five-year-old second-hand vessels dropping by 28% during 2012. Prices generally stabilized in the fourth quarter of 2012. Bulk Division The dry bulk spot market was volatile during 2012 driven by seasonality and events like the drought in the US grain season, the Indonesian raw material export ban and the tropical storms Isaac and Sandy. The bulk fleet increased by approximately 10% net in 2012 despite considerable scrapping of older tonnage. In 2012, growth in trade volumes reached approximately 5% with increased Chinese iron ore imports as the primary driver. The freight rates in the Panamax segment moved between USD/day 3,500 and 13,000 with an average market level of approximately USD/day 7,679, or some 45% below 2011 levels. In fact, this was the lowest level recorded in the Baltic Freight Index since 1986.