The thermite reaction is a highly exothermic reaction. The reaction takes place between aluminium and iron(III) oxide that produces molten iron. The reaction is: iron(III) oxide + aluminium → aluminium oxide + iron
This is a redox reaction, in which iron is reduced and aluminium is oxidised.
This is a competition reaction, showing aluminium to be a more reactive metal than iron. The reaction is highly exothermic, rapidly reaching temperatures as high as 20000C and the melting point of iron (15350C) that's why it produces molten iron.