Brazilian steel mills see trade disruptions spurred by Russia’s invasion of Ukraine as motivation for the U.S. to lift restrictions on imports of the alloy.

The Brazilian steel industry is asking its foreign affairs ministry to seek a resumption of talks with U.S. authorities to repeal so-called Section 232 measures that limit shipments of semi-finished product, mostly slab, to 3.5 million metric tons a year, said Marcos Faraco, chairman of industry association Instituto Aco Brasil. Last month, Japan reached a deal to allow most of its steel shipments to enter the U.S. tariff-free.

Given the U.S. imports more than a million tons of Russian slab, the surge in geopolitical tensions boosts the case for Brazil, the ninth largest steel-producing nation. Lifting the quota system imposed by Donald Trump in 2018 would be a welcome move for Brazilian mills facing rising costs as the war further tightens energy and coal markets.

“At this point, these discussions are much more pertinent,” Faraco said said in an interview. “The U.S. starts to have this need, and Brazil is able to meet the demand.”

Brazilian steel producers are trying to source coal from the U.S., Canada and Australia to replace shipments from Russia and Ukraine. The clock is ticking given the industry has 120 to 150 days of inventories, said Faraco.

Surging coal prices support Aco Brasil’s plan to produce more steel from scrap, which generates about 90% less greenhouse gases than metal made from iron ore and coal. Brazil isn’t self-sufficient, yet exports 10-15% of its ferrous scrap.

“Brazil needs to review its export policy for the raw material,” said Faraco, who is also an executive at Gerdau SA. “We’re exporting CO2 credits in the form of scrap.”

The Brazilian association is discussing with authorities measures to encourage scrap, such as a fleet renewal program that provides incentives to take old vehicles out of circulation and use recycled materials to produce new vehicles with a lower carbon footprint. 

The industry is also banking on increased energy efficiency and migration to renewable sources to reduce emission levels by 2030, when new technologies for cleaner steel production should be available.