"China shock" has hit ferromoly consumers worldwide, scrambling to obtain firm sell offers, sources in Japan and South Korea said on Thursday.

The Chinese government is expected to impose a quota on molybdenum oxide and ferromolybdenum exports in the first half of this year. There has been no official announcement on the system yet, but consumers, notably those in Europe, are rushing to build up their inventories. Some Japanese consumers have also been affected.

One Japanese trader said he had around 100 mt of molybdenum materials stored in warehouses in Europe and they sold out. A Korean trader said he has heard that ferromoly stocks in Rotterdam warehouses have decreased to the volume equivalent to 15 days of consumption. There was no supply disruptions at plants around Europe, and there was no sudden surge in the ferromoly consumption levels, but the buying frenzy flared up.

"This is not normal," said one Japanese trader, citing that most European consumers in the steel sector use moly oxide rather than ferromoly.

"This is because if China implements the quota, there is no way for the Europeans to replenish their current stocks," said one Korean source.

"Madness over ferromoly," as one Japanese trader described, has also spread to some consumers in Japan.

A second Japanese trader who has businesses with steel mills operating electric arc furnaces said some mills were forced to call off ferromoly tenders planned in February.

"The mills passed notes to traders calling for tenders, and have received back notes declining to participate," the trader said.

"Tender participants were afraid that even if they won, they would not be able to deliver, as export policy changes in China could hit any day," he said.

Traders said some Chinese sellers have been inconsistent, making sell offers one day and stopping the next day.

The situation is hitting smaller consumers rather than major mills operating blast furnaces. "Blast furnaces can use materials in various sizes, they are big enough to stomach just about any ferromoly. But smaller mills and consumers fabricating metals, have a set requirement regarding the ferroalloy conditions. They can not just use any metal," one source said.

Meanwhile, Japanese traders said they received buy inquiries from consumers and traders in Europe, India, South Korea and other parts of the world. Japanese usually to get more sell offers than buy queries.

A Korean trader reported selling ferromoly to an European buyer Wednesday at $71/kg CIF Rotterdam, prompt shipment. A Japanese trader sold one container of Chile-origin ferromoly at $67.50/kg CIF also to Europe, prompt shipment, and one container of Chinese-origin material at $67.50/kg CIF Europe, prompt.

The Korean trader said his current offer is $75/kg CIF Europe. "The price could hit $80/kg CIF," he added.