* Applies to contracts to move sugar through fire-gutted Santos Port terminal
* Shippers include Dreyfus, Bunge units
* Shiploaders, loading equipment are unharmed - CEO
SAO PAULO, Oct 22 (Reuters) - Brazil's largest trader of sugar and ethanol declared force majeure to third party exporters of sugar with contracts to ship through its Santos Port terminal that burned down on Friday, sources in the sugar trade said.
Two sources in separate international sugar trading houses said on Tuesday that Copersucar issued force majeure notices to third-party sugar traders that had contracted capacity at its terminal, as well as Bunge Ltd.
A local representative of French commodities trader Louis Dreyfus confirmed earlier trader reports that it had received a notice of force majeure from Copersucar. Spokesman Jose Osse said however the force majeure did not involve the Brazilian sugar business BioSev, which operates independent of Louis Dreyfus and has export terminal space with U.S. agricultural commodities company Cargill.
As traders raced to cover positions after news of the fire at Copersucar's terminal came out on Friday, the market began to question how Copersucar would deliver the huge tonnage it sold to Louis Dreyfus against the expiring October contract earlier this month.
Force majeure is a legal term referring to unforeseen catastrophic events freeing companies of contractual liabilities because events prevent it from honoring obligations.
Bunge representatives said they were considering a response to requests from Reuters for comment late on Tuesday. A Copersucar executive at a Sao Paulo event Tuesday night declined to comment on any possible cancellation of contracts.
Copersucar Chief Executive Paulo Roberto de Souza did, however, give some details on the state of the terminal, the capacity of which the company in June had doubled to 10 million tonnes a year.
"We were just able to get in for the first time on Sunday and I can say the shiploaders and loading equipment are unharmed, which is good news," de Souza said to a packed VIP room at one of Sao Paulo's poshest malls, Shopping JK Iguatemi.
Fire swept through five of Copersucar's warehouses at its Santos sugar export terminal on Friday, wiping out 10 million tonnes of Brazil's sugar export capacity for several months at least.
Traders from around the world mingling at the Copersucar event said spare export capacity was not in abundant supply in Brazil and that Copersucar would face great challenges both in the short and medium term meeting its delivery contracts.
Under the best of scenarios, some traders said that the company might have some raw sugar export capacity up and running by May of 2014, but they admitted that was optimistic.
Copersucar executives said Tuesday night their teams were working "24 hours a day to get operations running again."
One sales manager at a large sugar trader said Copersucar has contracts to move 1 million tonnes of raw sugar through December, which he did not see possible given the relatively tight export capacity as it is.
The market is even weighing the loss of capacity at Copersucar's sugar terminal on Brazil's ability to ship grains. During off-peak months for sugar exports last year, some traditional sugar terminals such as Cosan's Rumo and Noble converted some of their sugar capacity to handle soy and corn shipments.
But most traders say that the company's greatest challenge will come when next year's cane harvest peaks in June. Most people in the industry do not believe Copersucar will be able to regain most of its export capacity by that time.
One chief sugar analyst at a medium-sized Asian trader said at the event that Copersucar was actively seeking idle terminal space that could be quickly brought online to handle a portion of their sugar export business, which totaled 7 million tonnes in 2012. The company expected to reach 9 million tonnes this year before the fire hit its port warehouse complex.
"Brazil had the capacity to export 3 million tonnes of sugar a month. Now it can only export 2.4 million tonnes a month without Copersucar's terminal," the analyst said, declining to be named due to his company's professional relationship with the Brazilian trader.