By Brazil Stock Guide – Brazil’s pig iron industry gained breathing room after the US government set a 10% tariff on imports of the input, compared with the 50% applied to other minerals, Valor Econômico reported. The move eased pressure on exports and reduced the risk of plant shutdowns.
Silvia Nascimento, chief executive of Aço Verde, said during the Aço Brasil congress in São Paulo that the exemption reflected US dependence on Brazilian pig iron. “We were spared from higher tariffs because of the reliance of American mills on Brazilian pig iron. Customers themselves went to the government and requested the exemption,” she said. According to Nascimento, US buyers lobbied Washington to avoid disruptions to the domestic supply chain.
Exports Tied to US Steelmakers
Aço Verde exports about 240,000 tons of pig iron a year, with 140,000 tons shipped to the US and 100,000 tons to Europe. Clients include major steel producers such as Nucor Corp. (NUE), NorthStar, Steel Dynamics Inc. (STLD) and Big River Steel. The CEO noted that the 10% tariff cost is currently borne by US importers, who have so far accepted the impact.
Risks Linked to Diplomacy
Nascimento cautioned that any deterioration in Brazil-US relations could trigger demands for contract renegotiation. “Today, supposedly, there is no risk, but if the Brazil-United States relationship worsens, in my view, we would face a setback, and clients would want to sit down with us to renegotiate,” she said.
International Prices Under Pressure
The global pig iron price stands at about $400 a ton (FOB), a level that Nascimento said fails to cover production costs. The company ships under two-year contracts indexed to Fast Market’s formula, with cargoes leaving every two months through Espírito Santo state.
Steel Output Remains Subdued
Like much of Brazil’s steel industry, Aço Verde is operating below capacity. The company can produce 600,000 tons of steel annually but expects to close 2025 with about 480,000 tons. “We decided not to increase production because there is no demand. The little growth that exists is being fully met by imports,” Nascimento said.
Aço Verde’s steel output is directed entirely to the domestic market, with 70% going to construction and 30% to industry.
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