Brazil pig iron community reacts before US tariff takes hold

As reported by SMU last week, a source in Brazil said there have been two cargoes canceled by US mills that were scheduled to ship in August. The source now has reported one of the larger channels in Brazil has an August cargo available and is offering it to other consuming countries.

The Brazilian producers have concluded the tariff is going to render sales to the US unworkable. Therefore, they are reducing future production. They are no longer buying or producing charcoal, which they use as reductant. They are also holding up iron ore deliveries.

Getting ready

Most plants are processing what materials are on hand, and will shut down or reduce production until the situation improves. Workers are also set to be furloughed. Their domestic pig iron demand has not been very healthy recently, and there is not enough demand for export to other countries besides the US.  

Let’s say an agreement is reached where pig iron shipments to the US can resume. At that time, there will be a significant amount of timelapse for production to ramp up for the quantities needed for export.

SMU reached out to a US-based importer who said he is “baffled” these tariffs on pig iron are being allowed to take effect.

He said it is going to distort the scrap and steel markets and disrupt the trade flows in steelmaking raw materials. The importer added that steel lobbying groups have to besiege the Trump administration to ease the upcoming restrictions.

At this point, both US buyers and Brazilian sellers are basically just left waiting for the Aug. 1 implementation date, along with the rest of the industry.