| SAO PAULO
SAO PAULO Oct 21 A fire on Friday at
Copersucar's sugar terminal, the largest in Brazil, means the
company is likely to need to find space elsewhere from which to
export the sweetener next cane season while it rebuilds the
Copersucar lost 180,000 tonnes of sugar, or 10 percent of
Brazil's monthly exports to the fire. With global markets flush
with a surplus in sugar, the destruction its five warehouses is
a bigger challenge for the company and for sugar importers.
When Copersucar set out in 2011 to double its Santos Port
terminal capacity to 10 million tonnes a year, it took until
this June to complete the work, two years later.
"The size of Copersucar's export terminal will make it
difficult to finish construction in less than a year, so we will
not be back to the same export capacity soon," Tarcilo Rodrigues
at analysts Bio Agencia said.
The fire was barely smoldering and under control on Monday,
a spokesman at Santos Port, Sergio Coehlo said. The port has not
yet received any communication from Copersucar on the firm's
reconstruction plans for the terminal, he added.
Rodrigues, the analyst, said Copersucar will likely try to
ship more sugar out of Paranagua Port about 260 miles (400 km)
to the south of Santos and perhaps from the Rumo terminal next
door, which is controlled by Cosan, or Noble's.
Copersucar represents 47 sugar mills in Brazil and recorded
revenue of $4.1 billion in 2012. The company had hoped to expand
its annual trading volume to 9 million tonnes this year. In
2012, Copersucar had exported 7 million tonnes of sugar of the
24 million that Brazil exported.
Copersucar is still studying the damage and hasn't made
estimates on how long it will take to rebuild the warehouses,
said Leonardo Aragão, a spokesman for the company. He did not
comment on what the firm would do in the meantime.
Huge global stockpiles in sugar are giving some wiggle room
to cover shipments that Copersucar will need to make in the
months to come, traders said.
This crushing season is 80 percent complete in Brazil's main
center-south region, with only about two months left until
harvest winds down, so more affects will be felt next season
when harvest peaks again in May through September.
"Most of this year's sugar has been exported but the effects
will be felt on next year's exports. Ship lineups may grow at
Santos during the peak of sugar crushing," said lead sugar
analysts Mauricio Muruci at Safras e Mercado consultants.
In 2010, ships waited for over a month to load sugar during
the peak of harvest in June due to a backlog at Santos. Without
Copersucar's capacity these delays may be more likely to happen
again, analysts said.
Given the roughly 4.5 million tonnes global surplus in
sugar, the loss of the physical product is the least of
Copersucar's problems and is not likely to hurt immediate global
supplies. Stocks in consumer countries are high.
One manager of sugar trading at a major multinational sugar
exporter with capacity in Santos who preferred to remain unnamed
said that Copersucar was trying to work out its deliveries in
the short-term first but would have trouble with next year too.
The fire adds one more bend to the tortuous path Brazilian
agricultural products must take to global markets. Potholed
roads, scarce rail transport and backed up ports already
undercut margins of Brazilian sugar and grain producers and
cause headaches for global commodity markets.
(For details on Santos sugar capacity see:
International sugar markets reacted quickly after news of
the fire. ICE March raw sugar prices rose more than 6
percent to a one-year high on Friday before paring gains. The
March contract settled down 0.26 percent at 19.45 cents per lb
Copersucar's rivals in Brazil will likely pick up some of
the slack left by the fire and benefit from the extra export
volume and improved sugar prices. The fire did not affect
terminal operations at other exporters at Santos, such as Cosan
SA, Sao Martinho SA or Noble.
Julio Maria Borges, director of JOB Economia analyst, said
The loss of export capacity will restrict the supply from Brazil
slightly but added that the fire's effects will be limited on
the global level.
"The loss in export capacity will be absorbed by other
terminals that are run by Cosan's Rumo or Noble or other
traders," he said.