Method and arrangement for reduction annealing of iron powder

A method for the continuous reduction and soft annealing of water atomized iron powder, the iron powder comprising powder particles which are at least partially covered by an oxide skin, the method comprising conveying the iron powder in the form of a loose powder layer through an indirectly heated treatment chamber having an axial direction, the treatment chamber comprising a heating zone, a reduction zone and a cooling zone, maintaining a reducing atmosphere in the treatment chamber by continuously supplying reduction gas and by discharging reduction products formed in the treatment chamber, continuously revolving the powder layer at least in the reduction zone while the powder layer is being conveyed through the treatment chamber, maintaining a furnace temperature in the reduction zone in a range of 800.degree. to 950.degree. C., and continuously introducing fresh reduction gas directly into the reduction zone for controlling the dewpoint within the treatment chamber.