Tool Steel Industry Embraces High-Quality Development Opportunities

As the “industrial teeth” of manufacturing, the quality of tool steel directly determines the precision and efficiency of high-end equipment manufacturing. At the end of 2025, with industrial chain adjustments caused by raw material price fluctuations, the implementation of enterprise technological breakthroughs, and the continuous release of high-end downstream demand, China’s tool steel industry is bidding farewell to the old model of scale expansion. It is stepping into a new stage of high-quality development through technological innovation, product upgrading and market optimization. It provides solid support for the transformation and upgrading of the manufacturing industry.

Fluctuations in raw material prices have forced the industry to optimize supply chain management. Recent industry reports show that China’s tool steel market size reached about 150 billion yuan in 2025. Among them, raw material costs account for 40% of the total production costs. Price fluctuations of upstream raw materials such as iron ore and coke directly affect enterprise profitability. Affected by global supply chain tensions and geopolitics, international tool steel raw material prices have been steadily rising since 2024. Prices in the European market rose by about 10% due to supply chain disruptions. However, the domestic market has seen fierce price competition for some varieties due to capacity expansion. Faced with this situation, enterprises in the industry have taken various measures to cope with risks. These measures include diversifying procurement channels, optimizing inventory management, and developing low-alloy alternative materials. Leading enterprises have further enhanced their bargaining power through industrial chain integration. This promotes the industry to shift from passively bearing price fluctuations to active risk management.

Continuous technological breakthroughs of enterprises have improved product competitiveness. Recently, Chongqing Iron and Steel’s innovative achievements in the field of cutting and die steel have attracted industry attention. Its developed 50Mn cutting and die steel has successfully solved the technical problem of balancing strength and toughness by optimizing chemical composition and rolling processes. The service life of the product is 15% longer than that of traditional steel. It has been highly recognized by downstream customers. In the high-end field, leading enterprises such as Baowu Special Steel and CITIC Pacific Special Steel have realized large-scale production of powder metallurgy high-speed steel. They have improved material purity and structural uniformity through advanced processes. This increases the fatigue life of products by more than 30%. It effectively reduces China’s import dependence in the field of high-end tool steel. These technological breakthroughs have not only enriched the tool steel product system, but also promoted the market penetration rate of high-end varieties from 32% in 2021 to 46% in 2025.

The upgrading of downstream demand drives the optimization of the industry’s product structure. With the rapid development of new energy vehicles, aerospace, precision machinery and other industries, the demand for high-performance tool steel remains strong. Data shows that in 2025, the consumption of high-speed tool steel in the automotive industry accounted for about 45% of the entire market. The demand in the aerospace field was about 20,000 tons. The demand in the mold industry also accounted for 20%. To meet the requirements of lightweight new energy vehicles and high-precision aerospace components, enterprises have developed customized products. Examples include high-wear-resistant cold work steel suitable for lithium battery pole piece blanking and high-temperature-resistant hot work die steel. These products accurately meet the upgrading needs of downstream industries. At the same time, enterprises in industrial cluster areas such as Sichuan and Chongqing rely on regional advantages. They have built a one-stop service system covering “material R&D, customized production and after-sales support”. This further improves market adaptability.

Policy support and intelligent manufacturing empower industry development. Policies such as the national “14th Five-Year Plan for the Development of the Raw Materials Industry” clearly support the domestic substitution of high-end tool steel. They reduce enterprise innovation costs through tax incentives and R&D subsidies. On the production side, the application of digital and intelligent manufacturing technologies is accelerating. Enterprises such as Baowu and Northeast Special Steel have initially realized full-process digital production. They optimize production processes with the help of AI-driven quality prediction models and digital twin systems. This improves the stability of product quality. In addition, the “dual carbon” goal promotes the green transformation of the industry. The application of technologies such as electric furnace short-process technology and waste heat recovery enables tool steel production to reduce carbon emissions while improving energy efficiency. It conforms to the development trend of green manufacturing.

Currently, China’s tool steel industry is in a critical period of structural adjustment and quality upgrading. The challenges brought by raw material price fluctuations are being transformed into opportunities for the industry to optimize the supply chain and enhance risk resistance. The dual drivers of technological innovation and demand upgrading inject core momentum into the high-quality development of the industry. In the future, with the acceleration of domestic substitution, the in-depth integration of intelligent manufacturing, and the popularization of green production technologies, China’s tool steel industry will further narrow the gap with the international advanced level. It will occupy a more important position in the global high-end tool steel market and lay a solid material foundation for building a manufacturing power.