Nikkei edges up in choppy trade; Kobe Steel poised to plunge

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Kobe Steel says it discovered the falsification in inspections on goods shipped in the 12 months through August, affecting some 4 percent of shipments of aluminum and copper parts as well as castings and forgings.

Tokyo stocks rose Tuesday morning, bolstered by relief that North Korea had not yet taken any provocative action to mark an anniversary, but Kobe Steel was set to dive after it admitted fabricating inspection data for certain products. The company works with several major vehicle manufacturers including Toyota, Honda, Nissan, Mazda, Mitsubishi, Subaru, Ford and General Motors.

The steelmaker had sold metal with strength that did not match the quality standard it had promised its clients for use in products ranging from cars to aircraft.

According to executive vice president, Naoto Umehara the falsification had happened at all four of Kobe Steel's local aluminum plants.

Toyota, which also uses Kobe Steel materials, said they use the aluminum in hoods, doors and peripheral areas for which the supplier falsified data. A spokesman said: "We are rapidly working to identify which vehicle models might be subject to this situation and what components were used". "We recognise that this breach of compliance principles on the part of a supplier is a grave issue".

Honda said it had used falsified material from Kobe Steel in vehicle doors and bonnets, while Mazda Motor confirmed it used aluminium from the company.

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However, Yasuji Komiyama, director of metal industries at Japan's Ministry of Economy, Trade and Industry, said the scandal was "threatening fair and proper trading" by other companies.

It is now unclear what impact the scandal will have on Kobe´s business performance. Shares in Kobe Steel were untraded as of mid-afternoon in Tokyo on October 10, with a glut of sell orders.

The admission from the steel and aluminum maker follows scandals involving falsified data at household names such as Nissan Motor, Mitsubishi Motors and Takata Corp., which filed for bankruptcy earlier this year.

But the Nikkei newspaper said Toyota and Mitsubishi Heavy Industries, producer of the Mitsubishi Regional Jet passenger plane, are among notable clients affected.

"We want Kobe Steel to make the utmost effort to restore trust from society", he said. "If the aluminium business doesn't work out well, I question where the company can make money", given that profitability at the mainstay steel business remained low, he said. Toyo Tire & Rubber Co. officials were referred to prosecutors in March after the company's 2015 admission it falsified data on rubber for earthquake-proofing buildings.

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