Producing direct reduced iron (DRI) having chemically-combined carbon includes providing DRI at a temperature above 400° C., providing a first gas stream including hydrogen and carbon monoxide, passing the first gas stream through a methane forming process to yield a second gas stream containing a higher concentration of methane than the first gas stream; and contacting the second gas stream with the DRI. A system for producing the DRI includes a vessel for containing DRI at a temperature above 400° C., a methane forming reactor containing a catalyst bed for producing methane from a first gas stream containing hydrogen and carbon monoxide, a first conduit to feed a gas stream including hydrogen and carbon monoxide to the methane forming reactor, and a second conduit to feed the second gas stream to the vessel containing the DRI.