The Brazilian export basic pig iron (BPI) market has been shocked by today’s announcement from U.S. President Donald Trump about the implementation of 50 percent tariffs on all Brazilian exports, effective from August 1. All negotiations have fully stopped, and market participants are discussing the possible consequences for the market – from the mild one (if the tariffs will be reviewed) to the sever ones (including drastic production cuts).
Mild scenario
Under the mild scenario, which is possible only in case of review of the currently announced high tariffs, the pig iron exports from Brazil to the US will continue, though the decline in shipments in August and September will be obvious. Also, the big question is the price, as US mills have already pushed down prices by around 10 percent since April when the US announced reciprocal tariffs. So, Brazil producers, which already operate near to the breakeven, will unlikely to provide much lower prices.
“The Brazilian leftist government is completely lost, with part of them saying the reaction should be very tough and others saying Brazil should somehow start negotiations with the U.S. government,” a Brazilian trading source said. Another trading source, dealing with Brazilian exports, said that he believes that the final tariff on Brazil should be around 20 percent or 30 percent as the highest as it is bad for the US consumers, first of all, considering a lack of high-quality merchant pig iron in the global market.
Brazilian pig iron exports totaled 1.851 million mt in the first six months of 2025, increasing by 2.7 percent compared to the same period of 2024, according to the foreign trade authority, SECEX. In June, Brazil exported 358,100 mt of BPI, of which 85 percent were for the US market.
The latest deals for ex-Brazil BPI with 0.15 percent phosphorus content were done at $401/mt, $402/mt and $403/mt FOB (some of them including $4-5/mt financing expenses) in late June. Last week the trading has been slow, but “the market was already hesitant to buy new cargos for August/September shipment, now it's completely dead,” a Brazil-based source said.
The SteelOrbis reference price for import BPI (which includes both low- and high-phosphorus materials) has remained stable at $430-450/mt CFR until the market see clearer price picture.
Worst case scenario
The worst case scenario is if tariffs for Brazil remain at 50 percent and the consequences are expected to be a sharp fall in pig iron production and redirection of the rest volumes to other markets, Europe, in particular.
“It’ll be impossible to sell to the USA [with 50 percent duty], considering our high costs. But the announcement is very new, so we have to just wait and see the next steps,” a Brazilian pig iron producer representative said.
Out of the monthly allocation for exports from Brazil at 300,000 mt, market sources said it will be hard to redirect to other markets more than 100,000-150,000 mt per month.
In late June, the reference price for imported BPI in Europe has been at $410-435/mt CFR with the midpoint at $422.5/mt CFR Italy. So, for Brazilian exporters it translates to below a $400/mt FOB mark.
Alternative BPI origins for the US
There are not many alternatives the US buyers have, especially for high-quality BPI. In particular, Ukraine and India, having 10 percent duties, have been named as the countries that could enlarge exports of pig iron to the US, but the pace of increase will fully depend on the further protectionism policy and prices.
Other alternative suppliers, especially from Asia, have already faced higher reciprocal tariffs as announced on July 9 – Indonesia – 32 percent, Japan, S. Korea and Malaysia – 25 percent. Also, Vietnam was not included in the executive order, but Trump stated on Truth Social that Vietnam may face a 20 percent tariff (or 40 percent for transshipped goods). South Africa faced 30 percent tariff in the US, same as was voiced in April, so the pig iron sales are possible mainly to the European market.