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China Ferric Oxide Market Report, 2006

Published: August/2006

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In 2005, the production capacity of ferric oxide in China exceeded 700 kiloton, the total output to 622.7 kiloton and export volume to 329.5 kiloton. Ferric oxide products are mainly exported to North America, Europe and Southeast Asian.

Output of China's various Ferric Oxide,2001-2005 (unit: kiloton)

Source: China Association of Ferric Oxide Industry

The producers of ferric oxide in China mainly locates in southeast coastal area, from northern China to Yangtze Delta and southern China, 23,000 ton of output in Shandong and 18,500 ton in Hebei, 183,000 ton in Jiangsu, 233,000 ton in Zhejiang and 100,000 ton in Shanghai, 11,000 ton in Fujian and 8,000 ton in Guangdong. The total production capacity of ferric oxide in this coastal area reached 557,500 ton, accounted for 79.64 percent of the national production capacity. If all production equipment is put into production, it is no doubt that the coastal area will become an eye-catching production base of ferric oxide.

The scale expansion of China's ferric oxide industry has not only drew wide attention from relevant industries such as steel industry, smelting industry, titanium industry and sulfuric acid industry, but also attracted oversea manufacturers and sales companies. Some foreign ferric oxide manufacturers and sellers are optimistic of Chinese market, like Bayer, Rockwood and Elementis. They have already established sole proprietorshipenterprises or joint ventures in coastal area, like Shanghai, Fuyang(in Zhejiang) ,Changshu & Taicang(in Jiangsu), and Shenzhen. Nowadays, Jiangsu, Zhejiang and Shanghai and Guangdong become production bases for foreign ferric oxide manufacturers. Most of these foreign manufacturers mainly purchase primary products of ferric oxide, and then process them, whose annual production capacity exceeds 120,000 ton.

Ferric oxide products are mainly applied in the field of paint, also applied in magnetismmaterials. Ferric oxide is widely applied in paint industry, among inorganic color paints, the output and demand of ferric oxide is the largest. It is applied in various precast concrete units in construction industry and used as paints or colorants for construction products such as color floor tile, metope decoration, terrazzo floor and color tile. In addition, it is also applied in the pigmentation of various paints and protective substances (including water interior & exterior paint, powder paint) and oil paint (including various priming paints and finish paint). Ferric oxide paint can be also applied in rubber, plastic, ceramics, cosmetic, medical, paper and leather industry.

Main Applications of China's Ferric Oxide Products in 2005

Source: China Association of Ferric Oxide Industry

In 2006, the supply of China's ferric oxide will be balanced and ample, not excluding shortage or overstock in some areas or within certain manufacturers at a particular period.

Influenced by the history and social background, China has four major advantages to develop ferric oxide industry: skilled and low-cost labor force, rich raw materials, professional technical personnel and large market at home and abroad.

Ferric oxide industry belongs to a labor-intensive industry with resource and energy consumption. Along with the requirements of China environmental protection policies and development trend, higher requirements are put forward to protect the environment during ferric oxide production. Chinese government attaches great importance to production and management of ferric oxide industry, therefore a reasonable, moderate and feasible control on total demand of ferric oxide has been worked out. China has already released relevant policies to restrict these manufactures in immature production conditions with annual output below 5,000 ton, which not only waste resource but pollute environment, so as to protect exporting manufactures, to ensure reasonably utilize resource and to reduce pollution influences on social environment.

It should also be noted that problems co-exist with the rapid development of China's ferric oxide industry. On one hand, low threshold to ferric oxide industry caused mass production and long-term repeated construction, regardless of market demand; on the other hand, the primary products of China's ferric oxide accounts for a big market share, which means the quality of ferric oxide products is still at middle-low level in international market; moreover, the value added to products is low. Restricted by the requirements of energy, resources and environment, the production of ferric oxide is under higher pressure. Export is also hindered by Euramerican economic fluctuation and trade bulwark.

In general, China's ferric oxide industry has a good prospect. The construction of rural-urban infrastructure will stimulate the demand of ferric oxide as construction paint. Particularly, the start-up of Beijing 2008 Olympics project and Shanghai 2010 World Expo project will drive the development of ferric oxide industry. What's more, the demand of China's ferric oxide products in oversea market is also large. As long as China's ferric oxide manufacturers seize this opportunity, speed up saving energy and reducing energy consumption, develop new products and improve the value added to products, more market shares can be occupied.



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