This year, the domestic sales of ferric chloride have been challenging, while international markets have shown relatively better performance. Our company's annual production capacity for ferric chloride is 10,000 tons, but in the first half of the year, the average monthly output was only 550 tons. According to a survey conducted by Yang, manager of the chemical company, the domestic market is currently under significant pressure due to rising raw material costs, stricter environmental regulations, and shrinking profit margins. One major issue is the sharp increase in raw material prices. Since 2008, competition in the domestic ferric chloride market has intensified. With the cost of key raw materials rising rapidly, selling prices have also gone up. In June this year, some trading companies priced ferric chloride between 5,000 and 5,500 yuan per ton, though actual transaction prices varied. In East China, the price reached 3,800–4,000 yuan, while in Northern China, it was around 3,900–4,100 yuan. Since the start of this year, iron scrap and liquid chlorine have both seen significant price hikes, reaching 3,600 yuan and 1,600 yuan respectively. These increases represent a 30% to 40% year-on-year rise. If production costs per ton exceed 3,000 yuan, profit margins for ferric chloride could drop by 20% to 30% compared to 2007. Another challenge is the growing pressure from environmental regulations. Currently, many ferric chloride production facilities are still relatively outdated. If not properly managed, these systems can release harmful gases, posing risks to human health. As environmental standards become stricter, companies are being more cautious and investing more in safety and pollution control. In cases where equipment is not operating efficiently, companies often halt production immediately for repairs. Until further technological upgrades are implemented, Chinese ferric chloride producers must operate carefully and cautiously. It is reported that German scientists are currently working on improving production facilities, which may bring positive changes to the industry. The scale of production companies also varies significantly. A senior executive from a large ferric chloride producer in Shandong noted that most domestic producers are located in central and eastern China. There are three major players: two in Shandong and one in Anhui. After expansion, their combined production capacity now reaches 30,000 tons annually. Additionally, several smaller companies collectively have a capacity of 22,000 tons per year. Although Shandong Qingdao Jintun Chemical Co., Ltd. currently only produces 2,000 tons annually, its growth potential is promising. In 2008, total domestic production capacity reached approximately 42,000 tons. Many companies were either operating at reduced levels or shutting down entirely. When the price of liquid chlorine fell below the average, production would be restarted; otherwise, it would remain idle. Ferric chloride is primarily used as a water treatment agent, an etching agent in printing, an oxidant, mordant in dyeing, a catalyst in organic synthesis, and as a raw material for producing other iron salts and pigments. It is also used in mineral processing. However, current downstream demand can only absorb less than 40,000 tons annually. Faced with oversupply, the three main domestic producers are taking measures to reduce production and manage costs in order to survive the tough market conditions.

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