Yes, you can do this with DFSORT/ICETOOL. But you need to supply more information before I can show you how.
Please tell me the starting position and length of each field in your input records, and the starting position and length of each field in your output records.
I assume the first field is the key - can you only have one or two instances of the same key (e.g. 1) or can you have more than two instances? If you can have more than two instances, show an example of the input and output records for that. Please use BBCODE code tags for examples.
Also, what is the RECFM and LRECL of your input file?