US exempts Brazil, India pig iron from tariffs

: Metals
26/07/23

The US exempted Brazilian and Indian pig iron imports from Section 301 forced-labor tariffs, the US Trade Representative (USTR) said on Thursday, shielding Brazilian material from a 12.5pc duty and Indian cargoes from a 10pc rate.

US buyers currently pay a 10pc tariff on pig iron imports from all origins under the temporary Section 122 regime. The measure is scheduled to expire on 24 July. If the tariff lapses as scheduled, pig iron imports from all origins would enter the US without additional duties from 25 July, following their exclusion from the Section 301 measures. The decision means Brazilian pig iron will avoid a 12.5pc tariff that would otherwise apply to products from economies deemed not to have sufficiently enforced measures against imports produced with forced labor. Indian pig iron was also exempted, avoiding a separate 10pc tariff applicable to countries that have adopted partial or full forced-labor import restrictions. Without the exemption, Brazilian pig iron would have faced a 12.5pc tariff after 24 July, putting it at a disadvantage against suppliers such as Ukraine. Pig iron was not included in the initial exemption lists in either Section 301 case against Brazil. The USTR later granted exemptions after US steelmakers and Brazilian producers argued that alternative suppliers could not replace Brazilian volumes and that the tariffs would increase costs for US steel production.

Based on the slated removal of the 10pc tariff and the now-excluded 12.5pc tariff, pig iron cfr New Orleans prices, which Argus last assessed at $495/metric tonne (t) on 21 July, could fall approximately $45/t to $450/t. This also stands in stark contrast to the potential price increase if the 12.5pc tariff had been imposed that could have lifted the pig iron cfr New Orleans price up to $507/t.

The USTR also exempted Brazilian pig iron from a separate proposed 25pc Section 301 tariff on 15 July.

Brazil supplied 59pc of US pig iron imports, or 1.3mn t, during January-May. The country has consolidated its position as the leading source of pig iron for the US market since 2022, when sanctions stemming from the Russia-Ukraine war halted Russian shipments. Although Ukraine and India have expanded their presence in the US market in recent months, market participants said neither country is capable of matching Brazil's export scale.

By Isabel Filgueiras

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