Growing Demand from Automotive Industry Likely To Boost Tool Steel Market

Published On: March 2018


Tool Steel refers to a wide range of carbon and alloy steels which are well-suited to be converted into tools. Tool steels are known for their hardness, deformation and resistance to abrasion. One of the key drivers for the growth of Tool steel market is the increase in the demand for tool steels for manufacturing various cutting tools, such as tool bits, drills, taps, gear cutters, saw blades, planers, jointer blades, milling cutters, router bits, punches, and dies, among others. Tool steel provides certain benefits such as high resistance to wear, good thermal conductivity and good hardenability, cost-effective machinability and excellent polishing and acid-treatment properties. These properties makes tool steel suitable for use by various end use industries including Automotive industry, Mechanical and plant engineering, Power-generation, Aviation, Food and packaging industry, Structural and civil engineering and Mining, thereby driving the growth of the market.

Market Growth Influencers

The tool steel market is mainly dependent on the automobile industry. Thus, the increasing or decreasing demand of the automotive industry directly has an impact on the market. The total volume of four wheeler production, across the globe, in 2015, was almost 90 million units and is expected to witness further boost, and reach more than 100 million units, by the year 2020. Moreover, the increase in the sales of new vehicles has mainly been because of competitive and diverse options available for finance. Another factor responsible for the increase in vehicle sales is the macroeconomic development and the rise in the global middle class consumers. This is the primary factor that drives the growth of the tool steel market and has gained prevalence in the recent times, with technological developments and rapidly increasing disposable income among consumers. Thus, the growth of the tool steel market is expected to go hand in hand with the growth of automotive industry. Moreover, with the global economy undergoing an unprecedented level of shift, major emerging countries such as China, India, Thailand, and Indonesia, among others are becoming manufacturing hubs for global tool steel players. Seeing the growth in emerging region, the other domestic players have also expended their presence in the other market. In order to tap these rising consumer preferences, leading global tool steel players such as SCHMOLZ + BICKENBACH, Böhler-Uddeholm, Dongbei Special Steel Group and among others are entering into new emerging countries for business expansion. As the global manufacturers continue to expand into growing and emerging markets, the demand for tool steel will also rise.

In the last few years, the global forging market has grown with a CAGR of around 5%, which implies a positive a sign for the tool steel market. Forged metals are widely used in industries such as automotive, factory automation, aerospace, defense and among others. From the manufacturing point of view, the demand for tools in these industries is expected to drive the tool steel market. Automotive is one of the prime industries as this industry consumes around 40% of the total forged metal across the globe. Additionally, technological advancements and growing demand from emerging countries has created a positive impact on the tool steel market.

Regional Analysis

Asia-Pacific is dominating the global tool steel market with the share of 62.45% in 2016. Asia-Pacific region has generated the highest revenue in the global market due to the presence of strong dominance of China. Asia-Pacific has also been a major producer of steel and tool steel, and mainly dominating the export market. Owing to the presence of major tool steel manufacturers, the market for tool steel has grown up. Moreover, the emerging economies, rapid industrialization and increasing demand from automotive industry has been the major driving factors. Another major reason behind APAC leading the global market is that the countries within this region were able to sustain its economy during the global economic crisis of 2008-09 and have been able to showcase continued growth in tool steel production and sales across the globe. China, being the most populated country in the world, has gained the top position in the global tool steel market in 2016. The country has for long maintained the reputation of standing at the forefront of the steel industry, rapidly progressing towards miniaturization and innovation. Therefore, in spite of being the market leader in the global steel marketplace, the country holds immense potential to grow in terms of tool steel sales for its applications. The large preference for domestic players has been identified to be the highest in China, and therefore, contributes the maximum revenue in the total market value for the country.

Additionally, North America is also of the producers of steel as well as tool steel with the production of 50 to 60 million tons per year. The North American tool steel market is mainly dominated by the US. In 2016, the US had a production of around 50 million tons of tool steel followed by Canada. The growing industrialization and increasing automotive industry has been the major driving factors. Additionally, the growing steel production will also augment the market for tool steel in North America.

Prominent Players

The major players operating in global tool steel market, who have adopted the strategies such as geographic expansion, mergers, and acquisitions are Nachi-Fujikoshi Corp (Japan), Voestalpine AG (Austria), Sandvik (Sweden), Baosteel Group (China), Samuel, Son & Co (Canada), Hitachi Metal (Japan), Eramet SA (France), Schmiedewerke Gröditz (Germany), Universal Stainless (US), QiLu Special Steel Co,.Ltd (China), Hudson Tool Steel Corporation (US), GERDAU S.A (Brazil) and Pennsylvania Steel Company (US).