Fire engulfs up to 300,000 tons of sugar at Brazil terminal

Reuters

SAO PAULO (Reuters) - A fire on Friday destroyed up to 300,000 tons of sugar and much of the Santos Port warehouses owned by Copersucar, the world's largest trader of the sweetener, the port authority of Santos said.

Copersucar says nearly a fifth of the world's sea-borne sugar trade flows through its trading desks.

ICE March raw sugar prices rose more than 6 percent to a one-year high on news of the fire, before paring gains. By 8:40 a.m. ET the contract was up 3 percent at 19.58 cents per lb.

"Three warehouses were destroyed by the fire and we are trying to control the fire now in a fourth," said a representative for the fire department in Santos, adding that four people were hurt.

Copersucar has six warehouses with capacity to hold 50,000 to 100,000 tons each at the Santos port, the world's main source of raw sugar shipments. Copersucar officials said they had no additional information about the containment and damage of the blaze beyond what the fire department has reported.

Live television footage showed a three-story high mountain of sugar engulfed in flames inside a warehouse that had lost most of its siding and roof to the flames.

Some of the overhanging conveyor belts that transport sugar between the warehouses and eventually to waiting ships at the terminal in Santos appeared to have toppled over or were lying on the pavement alongside some of the warehouse.

Brazil is at the tail end of a record 585 million ton center-south cane harvest that is expected to produce 34 million tons of sugar. Roughly 15 percent of the crop remains to be crushed.

In June, Copersucar had inaugurated an expansion project at Santos that doubled its export capacity to 10 million tons a year.

Copersucar represents 47 sugar mills in Brazil and recorded revenues of $4.1 billion in 2012. The company had hoped in June to expand its trading volume to 9 million tons from 7.2 million tons in 2012.

Codesp, which manages the day-to-day operations at Santos, said the fire broke out shortly after 6:00 a.m. local time (0900 GMT), after which a ship berthed at the terminal was removed.

The fire appeared to have been preceded by an explosion, an event not uncommon with bulk commodities like grains or sugar. The dust and gasses emitted by such bulk commodities are extremely combustible.

When large stockpiles of sugar catch fire, it can be extremely difficult to extinguish the fire quickly. As the sugar burns it create a carbonized outer shell as the fire burns into the center of the mound that inhibits the penetration of water and chemicals that would otherwise snuff out the blaze.

Firefighters will also have the challenge of dealing with subterranean passages that connect some of Copersucar's warehouses and through which sugar is transported.

Fabrienne Pointier at data provider Platts said the loss of the large volume of sugar is not as bad as the damage the fire has done to Copersucar's infrastructure at Santos.

"The real significance is that it is going to slow down the logistics. It's going to be many months to rebuild those warehouses," Pointier said.

Michael McDougal at sugar trader Newedge estimated it might take six months to get operations at the terminal back up and running.

(Reporting by Reese Ewing, Roberta Vilas Boas, Fabiola Gomes, Alberto Alerigi Jr, David Brough in London; Editing by Brad Haynes and Steve Orlofsky)

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