Kobe Steel products face delays

China customs conduct checks amid US inquiry

Kobe Steel Ltd’s 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.

Shinsho Corp, 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 the products were cleared after delays, the move by Chinese customs is another hitch for Kobe Steel as it tries to 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 US Justice Department inquiry and has lost customers as a result of the scandal. The revelations have sent companies in global supply chains scrambling to check whether the safety and performance of their products have been compromised.

The steelmaker on Tuesday provided an update on the safety checks of 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 their products, 90 had found no immediate safety issues and the rest were deemed to be safe by Kobe Steel’s own analysis.