UPDATE 3-Fire controlled at Cosan's Brazil sugar export terminal

Mon Aug 4, 2014 1:52pm EDT

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(Adds analyst quote, comment from Port)

By Reese Ewing

SANTOS, Brazil Aug 4 (Reuters) - Firefighters contained a blaze at Cosan SA's sugar facilities at the Port of Santos in Brazil on Monday, reducing storage capacity in the world's largest producer of the sweetener.

Cosan said in a statement that only one warehouse, controlled by its Rumo LogĂ­stica transportation unit, had been damaged. Warehouse 10, where the fire took place, had 15,000 tonnes of sugar in storage, about a third of a cargo ship, and has 18,000 tonnes capacity.

A press representative said operations continued and Rumo expected to load a ship later on Monday.

Sugar futures jumped as much as 5.6 percent to an 11-day high early on Monday but later edged 0.4 percent lower with traders citing the limited damage and lack of urgent demand for Brazilian sugar.

Rumo has two terminals, 16 and 19, at Santos and a total of five shiploaders. Terminal 16 was not affected by the fire and remained operational, Cosan said.

Another of Cosan's 11 warehouses at Santos, Warehouse 5, appeared to have minor damage, according to a Reuters witness, while a conveyer belt for transferring sugar from Warehouse 10 looked unusable.

Damage was significantly less severe than that from an October fire in Santos at Copersucar SA. That blaze quickly sent futures prices sharply higher and caused the sugar trader, Brazil's largest, to issue force majeure to some clients.

Copersucar's terminal, which is on a lot adjacent to Rumo, had restored about half of its 10-million-tonne capacity by June and was able to reroute some exports through other terminals, including Rumo's.

The company has since fixed almost half of the terminal's pre-fire capacity of 10 million tonnes but does not expect to have full capacity until February 2015.

Rumo's warehouses can hold 550,000 tonnes and have a total export capacity of 12 million tonnes a year. Cosan could probably redirect the sugar that would have been stored at Warehouse 10 to other ports to avoid declaring force majeure, said Tiago Cardoso of Williams Shipping Agents.

"There is room at Paranagua and at ports in the Northeast to ship out this quantity," he told Reuters.

When large stockpiles of sugar ignite, they can be difficult to extinguish quickly. As they burn, the fire creates a carbonized outer shell that inhibits the penetration of water and chemicals that would otherwise snuff out the fire.

"The fire is contained," Santos Fire Department Captain Marcelo Medeiros told Reuters. "There are still some minor outbreaks but we expect to have them cleaned up by this afternoon."

The Santos Port Authority and waterway regulator Antaq plan to review safety procedures in port operations after two fires broke out in less than a year, a port authority spokeswoman said. The cause of the fire that started on Sunday afternoon was still unknown.

Brazil, also the world's largest sugar exporter, is in the middle of the cane harvest in its main center-south growing region. Analysts expect the region to produce 32 million to 34 million tonnes sugar, slightly less than estimated earlier in the year due to an ongoing drought. (Additional reporting by Gustavo Bonato and Caroline Stauffer; Writing by Caroline Stauffer; Editing by Lisa Von Ahn and Marguerita Choy)

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