The US will exempt pig iron and iron ore from new 25pc tariffs on Brazilian imports, the United States Trade Representative said on 15 July.
Many Brazilian pig iron market participants had expected to face US tariffs, with some looking at Europe as an alternative destination. But mills in Europe have only a fraction of the US' pig iron demand, so some producers are concerned they will have to ramp down or heavily discount shipments to the US.
Producers in Ukraine and India had also hoped to capitalise on new US tariffs on Brazil, expecting higher prices and a larger share of the US market. The exemptions will limit opportunities for them, but most market participants expect the ruling to have little immediate impact.
"Both sides need to digest a little," a European trader said today. "The Brazilians have switched to more domestic sales, and the US customers have started importing from elsewhere, India in particular."
Another trader argued that Brazilian producers will have to sell at lower prices than they secured in June, citing intense competition from other countries.
"It is the summer season, so it is quieter, and Indian offers probably put a cap on Brazil," he said. "If India is [offering] around $480/t cfr Nola, Brazil may be around $495-500/t cfr, so $460-470/t fob."
Argus assessed basic pig iron at $491.25/t fob southern Brazil on 14 July, with few new price signals as Brazilian producers kept away from the spot market ahead of the tariff ruling.
Buyers in Europe could have benefited from US tariffs on Brazil. The EU considers Brazilian pig iron to be less carbon-intensive than Indian or Ukrainian material because it is made with charcoal, leaving Brazilian products with lower carbon border adjustment mechanism charges in the EU. If Brazilian producers could no longer price into the US, European buyers may have been able to negotiate lower prices for pig iron.
The new tariffs will probably have only a limited impact on Brazilian industry in general, with a long list of exemptions covering most Brazilian products sold to the US.
"It is much like last time, there are exemptions for a huge amount [of products], as most are consumer-facing or not produced domestically," the second trader said.
The US could still slap a 12.5pc forced-labour tariff on Brazilian pig iron as part of its section 301 investigations, which are set to end on 24 July. But many in the market view both investigations as a political manoeuvre to enforce maximum tariffs after the US Supreme Court ruled against President Donald Trump's 2025 "Liberation Day" tariffs in February, meaning the US could exempt the same products in the second ruling.
