Convection heat exchangers are commonly used for heat transfer in high-temperature furnaces and processes. Pipes from U-bundles of a convection section of a MIDREX direct reduction ironmaking unit heater which carries reducing gas have been investigated for failure analysis. Repeated failures had occurred at a specific location. Samples of the failed pipe were subjected to microscopic and metallographic characterization. Inner diameter erosion and metal dust, carbides, oxides, and carbon were found at the failure location. Optical microscope revealed severe carburization on the inner surface that was in contact with heat exchanger gas. Coarse carbides at the grain boundaries accelerated the wear and corrosion by intergranular cracking. The reducing gas composition (with CO), dust composition (with carbides), and exposed temperatures (> 400 °C) confirmed that metal dusting is the cause of the failure. The high-temperature corrosion of steel is caused by hydrocarbon gases which form thermodynamically metastable carbides of the base metal. Such failures can be avoided by maintaining the pipe surface temperatures below 400 °C or using pipes manufactured from high-temperature-resistant steels.