Iron Oxide: Development Direction Decided During the Adjustment Period
Year:2019 ISSUE:1
COLUMN:INORGANICS
Click:248    DateTime:Jan.15,2019


By Lin Zhihua, Iron Oxide Branch of NCIA


The iron oxide industry has encountered severe challenges in 2018. However, facing the weak demand, most producers were able to adjust the product structure and operation methods to be adapted to the domestic and international market, and the industry has thus entered a period of steady adjustment.

Production cost keeps going up

   The iron oxide industry’s economic indicators of the first half of 2018 are shown in Table 1. 

Table 1    Economic indicators of China’s iron oxide industry in 1H 2018

Item1H 20181H 2017YoY growth (%)
Capacity (kt/a)750700-
Capacity (t/a/producer)12 80012 500-
Production (kt)304.8318.2-4.21
Sales revenue (RMB 100 million)17.8518.5-3.51
Sales volume (kt)308327-5.81
Production/sales (%)97.2961.25
Domestic sales (kt)144.4150-3.73
Inventory (kt)2020-

   Iron oxide enterprises are facing not only the pressures of rising prices of raw materials, iron sheets and energies, but also newly issued policies regarding environmental protection, safety supervision and green production. Iron oxide companies receive price adjustment notices from suppliers and transportation units almost quarterly or monthly, and each time the growth is over 10%. Iron oxide producers have to raise the prices, and the increases are different depending on the products. The profit of the iron oxide industry is declining.

Industry pattern is changing

   In the past three years, nearly 30 producers have either stopped production, totally shut down or switched to other products due to strict environmental protection policies, and the total production capacity reduction reached 220 kt/a. The acceleration of the supply-side reform and more stringent environmental verification will force more backward capacities to withdraw from the market, which will benefit the entire industry.

   At the same time, some entrepreneurs have become interested in the development trend of iron oxide products and invested heavily in establishing joint ventures or new wholly-owned enterprises to promote the in-depth development of China's iron oxide industry. A number of new iron oxide projects have been established in Guangdong, Guangxi, Hunan, Hubei, Henan, Hebei, Jiangsu, Shandong, and Northeast China. The whole industry is relocating from the coastal areas to the inland regions, and the total capacity of these new companies has surpassed 150 kt/a.

Export

   At present, there are more than 25 companies directly or indirectly exporting the iron oxide products. In 2017, the export volume reached 319.3 kt, and the foreign exchange earned was US$313.4 million. In the first half of 2018, the export volume was 163.6 kt and the export value was US$169.5 million, both decreasing on the YoY basis. See Table 2 for details.

Table 2    China’s iron oxide export, Jan-Jun 2017/2018

YearExportsExports to US
20172018YoY (%)20172018YoY (%)
Export volume (kt)177163.6-7.656.645.25-20.05
Export value (US$ 100 million)1.6851.6950.10.55050.4984-9.45
Unit price (US$/t)959.3510368972.531101.4113.25

   The United States is China's largest buyer of iron oxide pigments. China exports 80 kt to 100 kt of iron oxide products to the United States each year, accounting for more than 30% of its total sales. China's iron oxide is competitive both in scale and quality. In some developed countries, measures to limit or reduce the production of iron oxide products have been taken from the perspective of environmental protection, and their import volume has been expanded, and their iron oxide plants have been relocated to developing countries.

It is essential to promote the quality enhancement

   From the perspective of the development structure, China’s iron oxide industry has entered a stage of steady adjustment, and efforts are being made to transform from a single pigment industry to a sector with diversified new materials. Some advantageous enterprises have integrated production and sales, and some projects’ capacities have exceeded 450 kt/a. The industrial concentration has been further improved, and a multi-new material industry has been formed.

   To achieve high-quality development, the iron oxide industry must implement strict policies on pollutions, improve resources utilization efficiency, and actively carry out the comprehensive utilization of wastes. After a long period of development in the producing technology, China’s iron oxide industry has evolved from a simple resource-consumption production sector to a secondary resource comprehensive utilization industry. Iron oxide production enterprises have started to use wastes like ferrous sulfates and steel pickling waste liquids as raw materials to realize comprehensive utilization.

Develop new applications and new materials

   Iron oxide products have the advantages of environmental friendliness and excellent tinting strength, covering power and weather resistance. They have been widely used in many fields such as building materials, coatings, rubber and plastics, ceramics and electronic materials. Due to advances in production technology, the dispersion of iron oxide products has been greatly improved, which not only greatly reduces the cost of use, but also further broadens its applications.

   In the future, the industry will focus on the development of new varieties of multi-functionality. It will not be limited to the coloring of weather-resistant, durable and beautiful decoration, but extend to soft magnetic computer drives, magnetic ink feature identification materials, copy magnetic powder, magnetic memory materials, petrochemical catalysts, medical laser detection heads, non-toxic water treatment agents, new energy vehicles energy-saving electric fields, automotive anti-vibration airbags and other functional materials, mainly for the research and development and industrialization of iron-based products in catalytic materials, desulfurization materials, water treatment materials and compound materials, so as to broaden its application in new materials.

   At present, color paste iron oxide, easily dispersible iron oxide, fine iron oxide, granulated iron oxide, heat-resistant iron oxide, non-toxic iron oxide, and special performance iron oxide have appeared in the industry. These upgraded products have the characteristics of ultra-fine powders such as good color shade, super dispersibility, and excellent weather resistance, and they enjoy lower cost as well.