October 30, 2013

Sugar Facilities at Port of Santos may take 18 Months to Rebuild

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The huge fire on October 18th at the Port of Santos has many wondering just how Brazil will cope with the loss of its largest sugar exporter and what it might mean for sugar and grain exports in 2014. Specialists estimate that it might take up to 18 months to rebuild the five warehouses and the connecting infrastructure of Copersucar's terminal destroyed by the fire.

The best guess at this point is that some of the export business will be taken up by the three other sugar terminals at the Port of Santos as well as facilities at the Port of Paranagua, but that is going to be hard to do because Copersucar is the largest sugar exporter in the world with a storage capacity of 300,000 tons, which is nearly half the total sugar capacity at the port. The Port of Santos is by far the largest sugar exporting facility in Brazil followed by the Port of Paranagua which handles about one third of Brazil's sugar exports.

All the other facilities that could help out are already operating at capacity and booked with contracts to fulfill, so it is going to be very difficult to compensate for the lost capacity at Copersucar. The only other port that could help out would be the Port of Paranagua since the other ports in Brazil do not have the capacity to increase their exports and they are too far away when you consider transportation costs.

Copersucar was scheduled to export 7.5 million tons of sugar this harvest season or 30% more than the 5.3 million tons it exported last harvest season. Nine vessels were scheduled to dock at the Copersucar terminal until the end of the first week of November and several of those vessels have been sent to the Port of Paranagua with the remainder being canceled.

For at least the next year, Brazil's sugar exports will be less than anticipated and the loss of this sugar terminal could also impact grain exports at the port and make an already over stressed export system in Brazil even worse (see next article).

While the fire at Copersucar was the largest accident in the history of the Port of Santos, it was just the latest in a series of recent accidents at the port. Over the last 21 months there have been four other accidents that have disrupted export activities at the port. In June, a collision of two ships damaged a shiploader at the port. Also in June, a fire the Guaruja Grain Terminal (TGG) suspended soybean loadings at the terminal. In September of 2012, a vessel slipped its moorings and impacted two of the four shiploaders at Warehouse 38. In February of 2012, a vessel damaged shiploaders also at the TGG grain loading facility.