Brazilian sugar giant Copersucar‘s terminal facilities in the port of Santos, Brazil, were wiped out last friday, destroying some 180,000 tons of sugar in the process, around 10 percent of Brazil’s total monthly sugar exports.
According to Reuters, two sources in separate international sugar trading houses said yesterday that Copersucar issued force majeure notices to all third party sugar traders that had contracted capacity at its terminal, including Louis Dreyfus’ local unit BioSev and Bunge Ltd.‘s Brazilian sugar business.
A Copersucar spokesman said that he couldn’t confirm the company had declared force majeure, and that the company is assessing the damage from the fire.
Experts say removal of the debris from the blaze and rehabilitation of Copersucar’s port complex could take as long as 6-18 months. That means Brazilian shipping capacity may be compromised through the end of the next harvest in 2015.
“The sugar itself is the least of their worries,” said Phil Pia, a trader at Brazilian mill Grupo Andrade, “They won’t be loading any sugar out of that terminal anytime soon. The loss of Copersucar is going to tighten up logistics considerably.”
Copersucar was by far the biggest exporter at Santos, with the ability to store about 300,000 metric tons of sugar, accounting for almost half of the port’s sugar-storage capacity. Three other terminals ship sugar out of Santos, which according to port authorities has a total capacity to export close to 16 million metric tons of sugar a year.
With a new cycle of harvests about to start, ports will be packed with grains for the next several months.
“It’s going to be very complicated to find an alternative, especially since other ports are working with contracts that run through the end of the harvest” in April, said Nicolle Monteiro de Castro, an analyst at SA Commodities, a Santos-based brokerage and shipping agency. “We’re still not sure how Brazil’s sugar will be shipped since there isn’t enough capacity at other ports.”
On Tuesday, sugar declined a second day in New York as traders assessed the consequence of the fire at Brazil’s main port. Raw sugar for delivery in March declined 0.5 percent to 19.32 cents a pound by 5:55 a.m. on ICE Futures U.S. in New York. Prices fell 0.4 percent yesterday. Refined, or white, sugar for December delivery was little changed at $512.10 a ton on NYSE Liffe in London.