During deformation of austempered ductile iron the carbon can be squeezed out of the material. This carbon is present as nodules of graphite, what is probably happening is that the carbon nodules migrate to the surface, allowing the volume to be reduced in response to the loading.
Another possibility is that carbon is dissolved into the iron and then nucleates and grows sheets on the surface. That seems less likely.
At high temperatures the mostly likely thing to happen would be that carbon on the surface would oxides and form CO gas and be liberated.