Market Prospects of Ferric Oxide in China   

Ferric oxide is a type of pigment. It is widely used in construction materials, coatings, plastics, chemical catalysts and electronics and communications and has very good application prospects in fine chemicals and chemical new materials. Now, the average annual growth rate of the global ferric oxide consumption is 2-4%. In China, this growth rate reaches 6-8%. In recent years, the supply of ferric oxide in China is listed in Table 1.
                   
Table 1  Supply of ferric oxide in China  (thousand tons)
Year    2008    2009    2010    2011(predicted)
Supply    514.6    483.6    594    642
YoY growth rate/%    -25.42    -6.02    22.82    8.0

   Now, the annual consumption of ferric oxide per capita in China is about 400 grams, while in developed countries, this figure reaches 500 grams. Thus, the consumption of ferric oxide still has some room to grow in China. It is expected that in 2011, the demand for ferric oxide in China will exceed 650 000 tons, and the sales value of ferric oxide will reach about RMB4 billion.
   With the rise of energy and raw materials prices, ferric oxide prices are also forced to go up. This will bring some obstacles to the sales of ferric oxide. In addition, the capacity of ferric oxide in China is seriously excessive. Fierce market competition will eliminate some small-scale ferric oxide producers, causing the ferric oxide industry to reshuffle.
   Overall, despite price hikes, the demand for ferric oxide in China will continue growing in coming years. But due to overcapacity, the market competition will be even fiercer, and the margins of ferric oxide producers will be further shrunken.