Analysis
March 26, 2026
Brazilian pig iron market in doldrums, fuel tax could hit freight
Written by Stephen Miller
The pig iron market in Brazil has been quiet lately. There have been few bids or offers made by market participants. And a new fuel tax in Brazil could impact freight costs.
Sources are reporting there is reduced production in Brazil, which is seasonal. Therefore, the channels are not able to offer their usual volumes.
Earlier this month 1-2 cargoes were transacted at a price of $450 per metric ton (mt) FOB S. Brazil, meaning $480-85/mt delivered to New Orleans.
Sources on ground
SMU spoke with a US-based pig iron executive who said he’s heard of no offers since these last cargoes.
“I do think pig iron availability is limited and thus prices will eventually rise, maybe to $500/mt CFR with fuel rising,” he said.
Another trading executive in Brazil told SMU his group’s next cargo will be for June shipment. But it is not being offered yet.
SMU contacted another pig iron trader at a large channel in Brazil.
He said a US mini-mill has been attempting to buy a 50,000 mt cargo and is bidding suppliers at $460/mt FOB.
He added, “However, I doubt there is that quantity available for June shipment.”
The trader estimated the ocean freight to the US at $30/mt. According to this source, production of pig iron is still low due to charcoal shortages, which may not normalize until late April.
Other sources have estimated the freight to the US at $30-35/mt for shipment in May.
There have been reports of a hesitancy on the part of shipowners to commit to freight beyond May.
New fuel tax in Brazil
Pig iron is usually sold on a CFR destination basis. The freight rates associated with Brazilian pig iron, however, may be eventually influenced due to a new tax by the Brazilian government on exported fuels, like crude oil, diesel and marine gasoil (MGO).
This may indirectly increase freight rates on the pig iron export trade since refueling vessels in Brazilian ports will incur a 50% tax on bunkers. Sources say the new tax is expected to cause fleet repositioning as vessels avoid having to obtain bunkers in Brazil. This could result in fewer ships being available for chartering.
The tax became effective on March 12. The export tax applies to crude oil (12%), diesel fuel and marine gasoil (50%). So, in addition to increasing freight costs for exports of pig iron due to taxes on the ship’s fuel, it also will contribute to the general increase in fuel costs in the Atlantic Basin due to the reduction of exports of Brazilian crude and diesel fuel.
The intent of the law is to keep more crude oil and diesel fuel in Brazil during the oil shortage resulting from the Iran War. Unfortunately, the export trade of other commodities from Brazil may be impacted.
Needless to say, this is another obstacle for iron and steel producers that rely on Brazil for most of their pig iron requirements.
