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Some Kobe Steel products facing China customs delays - Shinsho president
October 31, 2017 / 7:57 AM / in 24 days

Some Kobe Steel products facing China customs delays - Shinsho president

TOKYO (Reuters) - Kobe Steel Ltd’s (5406.T) trading unit said on Tuesday it has experienced delays getting products from the embattled Japanese steelmaker through Chinese customs because of a data fabrication scandal that has rocked global supply chains.

The Kobe Steel (KOBELCO) headquarters are seen in Kobe, western Japan October 24, 2017. REUTERS/Thomas White

Shinsho Corp (8075.T), which sold some Kobe Steel products with tampered specifications, has been hit with delays on some shipments as Chinese custom officials sought more information, President Takafumi Morichi told an earnings news conference.

While Morichi said products were cleared after delays, the move by Chinese customs is another hitch for Kobe Steel as it tries get to the bottom of widespread data tampering on products used globally in cars, trains, aircraft and nuclear plants.

“Some of our customers have told us their biggest concern is potential disruption of product supply due to Kobe Steel’s misconduct,” Morichi said. “We are trying to make sure that we keep delivering products on time.”

The company has not received any cancellations from its customers, but it sees some risk of an impact on its business, including some of them switching suppliers, Morichi said.

“It’s difficult to assess the impact on our business now, but if customers decide to cancel their orders, our sales and profit will be affected,” he said.

Kobe Steel is the subject of a U.S. Justice Department inquiry and has lost customers as a result of the scandal. Its shares have fallen more than 30 percent since it revealed the fabrication earlier this month. They rose 3.3 percent on Tuesday, while the Nikkei 225 .225 ended unchanged.

The revelations have sent companies in global supply chains scrambling to check whether the safety or performance of their products has been compromised.

Japan’s third-largest steelmaker on Tuesday provided an update on the safety checks for its products, saying it now assesses there were no safety issues with falsely certified components sent to 443 customers, up from 437 as of last Thursday.

Of these, 252 customers had confirmed the safety of the products, 90 had found no immediate safety issues and the rest were deemed to be safe by Kobe Steel’s own analysis.

One of its customers, Mitsubishi Heavy Industries Ltd (7011.T), also confirmed on Tuesday that it found no safety issues on the parts supplied from Kobe Steel for test planes of Mitsubishi Regional Jet (MRJ) passenger aircraft that is being developed.

However, Chief Financial Officer Masanori Koguchi did not confirm that it will use Kobe Steel’s parts when it starts MRJ production.

“We will naturally consider whether to continue using the parts from Kobe Steel or switching (suppliers),” he told an earnings news conference.

Kobe Steel on Monday pulled its forecast for its first annual profit in three years as it tries to deal with the financial impact of one of Japan’s biggest corporate scandals.

Reporting by Yuka Obayashi and Maki Shiraki; Writing by Aaron Sheldrick; Editing by Christian Schmollinger and Jacqueline Wong

Our Standards:The Thomson Reuters Trust Principles.
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