Daehan Steel Withdraws from Korea Iron & Steel Association

First-ever Case of Member Company Withdrawal
"Failed to Properly Represent the Voices of Steelmakers"

[Asia Economy Reporter Hwang Yoon-joo] Daehan Steel has withdrawn from the Korea Iron & Steel Association. This is the first time a steel company has left the association for reasons other than business suspension or downsizing, causing considerable ripple effects in the steel industry.

According to industry sources on the 28th, the Korea Iron & Steel Association excluded Daehan Steel from its membership in January. This was a response to Daehan Steel's expressed intention to withdraw.

The Korea Iron & Steel Association was established in July 1975 to enhance the international competitiveness of the steel industry and promote camaraderie within the steel sector. The inaugural chairman was Park Tae-joon, then chairman of Pohang Iron and Steel (POSCO), and since then, it has been customary for the POSCO chairman to serve as the association's head. The association has played a significant role in personnel and information exchange within the steel industry, including establishing "Steel Day" (June 9) in February 1999. With Daehan Steel's withdrawal this year, the membership now consists of 38 regular members (steel manufacturers) and 6 special members (distributors and organizations).

The background to Daehan Steel's withdrawal is cited as dissatisfaction with the Korea Iron & Steel Association. During the height of the COVID-19 pandemic last year, the steel industry conveyed requests through the association to the government for reductions in environmental charges and industrial electricity rates but failed to achieve significant changes. In contrast, the Korea Petroleum Association actively proposed measures such as "fuel tax reductions" and "exemptions from consumption tax on heavy oil for raw materials" when the refining industry recorded unprecedented losses due to plummeting oil demand and prices. As a result, temporary fuel tax suspensions and consumption tax exemptions on heavy oil for raw materials were achieved. The Korea Shipowners' Association strongly opposed POSCO's announcement of establishing a logistics subsidiary, and the Korea Petrochemical Industry Association is well known as an organization leading close exchanges among members, including providing market information.

In particular, the industry's consensus is that the recent Fair Trade Commission's investigation into "scrap metal collusion" was the direct cause of the withdrawal. Last month, the Fair Trade Commission imposed fines totaling 300.1 billion KRW on seven domestic steelmakers for collusion, which reportedly increased dissatisfaction with the Korea Iron & Steel Association.

An industry insider explained, "There was not enough opportunity to present a defense, and it was revealed that some steelmakers did not engage in evidence destruction as previously reported, indicating that their right to defense was infringed." They added, "During this process, criticism arose that the Korea Iron & Steel Association did not represent the voices of steelmakers at all."

However, there are also evaluations that Daehan Steel made a hasty decision. The steel industry comprises diverse sectors such as blast furnace companies, electric furnace companies, steelmakers, and distributors, making it difficult for the Korea Iron & Steel Association to actively respond to all issues. The association has achieved results on major issues such as punitive tariffs on Korean steel products by the United States and suspension orders for pollutant emissions.