Not sure why this is dead, but AFAIK magnetism in iron and steel is dependent on "domains" of iron molecules that are aligned in a crystal structure so the magnetic effect isn't just scattered to all directions. That's why some kinds of stainless steel aren't magnetic - the adulturant elements break up the crystal structure. In this case I think the question would be whether these particles are big enough to form a "domain" and become magnetic.

If the output is iron oxide, no it is only very very weakly magnetic.

And if iron(III) oxide is near the melting point, it's unlikely to be magnetic and may not even be paramagnetic. This would be an interesting lab experiment: heat a sample to 1500 C exactly and test for paramagnetic properties.