European pig iron buyers look to Brazil for low CO2 supply to mitigate CBAM cost

European pig iron buyers are looking at potentially increasing trade volumes from Brazil once the EU's Carbon Border Adjustment Mechanism (CBAM) starts Jan. 1, 2026, market sources told Platts, part of S&P Global Commodity Insights.

At the bi-annual members meeting of the International Iron and Metallics Association running from March 24-25 in San Sebastian, Spain, market talk centered on the potential shift in pig iron trade flows amid the already exhausted 2025 import quota for Russian material, the incoming ban on Russian pig iron from 2026, and CBAM starting in 2026.

Attendees said that due to its low carbon intensity, Brazil will be well-placed to make up for volumes needed to replace Russian pig iron imports into the EU which will be banned from 2026.

Some Brazilian pig iron suppliers can offer lower carbon emission material where the cost impact of CBAM -- a carbon tariff on carbon intensive products, such as steel and cement, imported to the EU -- is expected to be more limited, as opposed to higher emission-intensive material from other regions.

One Spanish importer told Platts on the sidelines of the event that they usually bought Ukrainian pig iron but were considering purchasing more Brazilian material given the CO2 emissions.

"If Ukraine isn't exempt from CBAM then we might have to look for material from others such as Brazil," said a Central European importer.

US more attractive to sellers

A Brazilian pig iron trader said they were optimistic about future demand for Brazilian material either to the US or the EU. "However, there is only about 400,000 mt of annual capacity [for low CO2 material], so the domestic and export market will be competing with each other," the trader added.

Brazilian pig iron would lead to around 0.3/mt of CO2e in direct emissions and 0.6/mt in indirect emissions, another European trader said.

A Turkish trader said that there was still enough Russian pig iron in stock in the EU for the next few months, so there might not be an immediate need to replace large volumes.

The question remains if Brazilian pig iron will actually opt for selling into Europe, as the US has been a higher-priced market. Similarly, the majority of Ukrainian pig iron is also exported to the US instead of Europe.

"Pig iron traders are jacked up, but Ukraine will continue to sell to the US and not Europe," a US trader said.

According to S&P Global Market Intelligence's Global Trade Atlas, the EU imported 2.16 million mt of pig iron in 2024, a 10% decrease from 2023.

Brazilian supply experienced an 8% year-over-year decrease in 2024, as Brazilian suppliers shifted their focus toward the US market, attracted by lower freight costs and more favorable pricing conditions.

Russia was the main supplier of pig iron to the EU in 2024, accounting for 47% of total imports. However, given Russia's quota in 2024, European customers increasingly began to explore alternative sources. Imports from South Africa surged by 41% year over year in 2024 compared to the previous year. Ukrainian exports saw a significant increase of 16% year over year.

Platts assessed FOB Black Sea pig iron at $341/mt March 21, up $1/mt week over week, while the Brazilian pig iron assessment was stable at $450/mt FOB Southeastern ports. The US pig iron import price was assessed at $480/mt CIF New Orleans March 21, up $5/mt on the week.