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“In the transition phase, there can’t be just one route for the decarbonization, hydrogen usage – if you want do decarbonize, you should use different solutions. Charcoal-based pig iron is one of them, it is just not common in Europe,” Fernando Pessanha Santos, chief strategy officer at Hydnum Steel, said.
Charcoal-based pig iron can be a tool for decarbonization. This is mainly because during the period of reforestation, removal of CO2 from the atmosphere is higher than CO2 emissions during the process of making pig iron.
Brazil is the key supplier of charcoal-based pig iron. It can also be sourced from Angola, South Africa and Latin America. But the supply from these locations is irregular, Fastmarkets understands.
In 2024, Brazilian independent pig iron makers finished with 50 mills in operation, with a nominal installed capacity of approximately 7 million tonnes per year. This is according to Sindifer, a union of pig iron producers.
But estimations of the realistic maximum of production heard from market sources was 6.7 million tpy, while the output was 5.1 million tonnes.
In the same year, Brazil exported 3.76 million tonnes of pig iron, according to Sindifer, with 87% or 3.27 million tonnes shipped to the US. Meanwhile, exports to the EU were just 9%, or close to 340,000 tonnes.
“People in Europe do not see that charcoal-based pig iron can meet their decarbonizing needs; that is why [Europe’s] import of such product is not large, and can’t help to decarbonize such big steel volumes [produced in the EU] – that is why it can be a part of the solution… and it can play a bigger role,” José Noldin, chief executive officer at sustainable iron company GravitHY, said.
The key reason for the US being a preferable destination is the premium in the market.
The annual average of Fastmarkets’ weekly price assessment for pig iron import, cfr Gulf of Mexico, US was $476.39 per tonne in 2024. The assessment for pig iron import, cfr Italy averaged at $417.74 per tonne in the same comparison. Thus, the annual average premium of the US market was about $58.65 per tonne in 2024.
In January-May 2025, the premium was as high as $52.70 per tonne. And according to forecasts provided by Fastmarkets’ research team, it will average $49.78 per tonne in the second half of year.
Brazil-origin pig iron, which is produced with charcoal, also has a premium over Russia-origin pig iron, which is coke-based. But that premium does not come from any green strategy, but from sanctions: Russia is no longer able to sell to either the US or the EU, where the market level is normally higher than in other regions.
In January-May 2025, the average of Fastmarkets’ weekly price assessment for pig iron export, fob port of Vitoria/Rio, Brazil was $472.43 per tonne CFR, while the price assessment for high-manganese pig iron export, fob main port Black Sea, CIS averaged at $330.25 per tonne in the same comparison.
Thus, the premium for Brazil-origin charcoal-based pig iron over Russia-origin coke-based pig iron was an average of $97.18 per tonne in the year to date.
Meanwhile, Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe averaged €166.05 ($191.40) per tonne in January-May 2025.
Thus, more than half of the average green steel premium could be impacted by higher charcoal-based pig iron price, Fastmarkets calculated.
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