Tool Steel Market

Market Overview

The global tool steel market size was valued at USD 5.07 billion in 2021. It is estimated to reach an expected value of USD 8.16 billion by 2030 at a CAGR of 5.3% during the forecast period (2022-2030). 

Tool steels are from the carbon steel family and are particularly well-suited to be crafted into tools. Tool steels comprise four carbide-forming elements: tungsten, chromium, vanadium, and molybdenum. These elements enhance the heat resistivity, hardness, and durability of tool steels. Tool steels also contain cobalt or nickel, which improves their high-temperature performance. Tool steels are classified under six broad groups: water hardening, cold working, hot working, shock resistance, high steel, and particular purpose.

The selection of tool steels depends on various factors, such as cost-effectiveness, surface hardness, strength, working temperature, shock resistance, and toughness. Tool steel is used for multiple applications, such as cutting, pressing, extruding, stamping, forming, shearing, and cutting metals. Additionally, injection molds are made from tool steels because of the material's excellent abrasion resistance. Technological advancements in the industrial manufacturing sector, including advanced heating technologies supported by strict government regulation of automated heating technologies for manufacturing, especially in North America and Europe, have dramatically increased tool steel demand, which is expected to support tool steel market growth.

Market Dynamics

Market Driving Factotors

Government Investments in Building and Construction Activities

A nation can become self-sufficient and export-competitive with the help of government programs. Mass migration brought on by population development in emerging economies has put a tremendous burden on the city's infrastructure. Governments have been offering lenient loans to encourage FDI and investment in their respective nations' industrial and construction sectors to combat this. Growing government spending and the rising demand for building and construction propel the global market for tool steel since it is utilized extensively in construction activities through hand tools, pneumatic tools, and automotive parts of vehicles used in construction activities. The development of the economy of the nation depends on its infrastructure. The infrastructure sector dramatically aids the development of the country.

Governments worldwide actively contribute to the industry's growth by enacting benevolent legislation and launching initiatives that promptly guarantee infrastructure development. Overall investments have been spurred by sizeable investments in infrastructure projects, driving the global tool steel market's explosive rise. Technological advancements in the industrial manufacturing sector, including advanced heating technologies supported by strict government regulation of automated heating technologies for manufacturing, especially in North America and Europe, have dramatically increased tool steel demand, which is expected to support tool steel market growth.

Increasing Demand for Tool Steel Worldwide

The global tool steel market is primarily driven by rapidly increasing industrial demand. Industrial heating equipment, molding, and other equipment demand in developed countries are driven by continuous technological advancements across industries. Demand for the same applications in developing regions is driven by advancing automotive and establishing aerospace industries. The primary factor driving the global market in developing regions like Asia-Pacific, the Middle East, and South America is the demand for tool steel, which has multiplied in the last five years due to the need to maintain good equipment status in the automotive, food manufacturing, packaging, and various other industries.

Market Restraining Factors

Different Characteristic Limitations of Various Tool Steel Types

Different tool steel types have different characteristics regarding components, curing process, strength, durability, impact influence, and many other things. Tool steel is bound by limitations, which does not allow it to be used for each application across various sectors. Many small applications requiring faster construction and processes cannot use tool steel. These factors are expected to hamper the overall popularity of the tool steel. Moreover, safety is the utmost concern for people working in and around the tool steel. Several tool steel components are very heavy to work with and require other machinery to carry and transport. Labors working in the manufacturing and other sectors are generally uneducated or partially illiterate people with a shallow understanding of the consequences of their wrong actions, which may somewhat restrain the overall global market. On the other hand, many rules and regulations have supported the construction industry in safely handling tool steel by workers, which is expected to support the overall growth of the tool steel market in the long run.

Key Market Opportunities

Increasing Demand for Tool Steel in Industrially Revolutionizing Economies

Emerging economies are late adopters when it comes to innovation and technology. Rapid industrialization and urbanization have increased the demand for efficient, cost-effective, and time-efficient construction processes, electronic products, energy, and transportation options, which has compelled the manufacturing sector to shift its focus to the modernization of equipment and ease of work. Tool steel is required at every step, from industrial to food manufacturing.

Increasing government subsidies in industrially revolutionizing regions such as Asia-Pacific and South America have led to resurgent investments in the manufacturing and other industrial sectors to meet the growing population's demand for products. This has increased demand for tool steel, creating an opportunity for the global tool steel market.

Regional Analysis

By Region, the global tool steel market is segmented into North America, Europe, Asia-Pacific, and LAMEA.

Asia-Pacific accounted for the largest market share and is estimated to grow at a CAGR of 5% during the forecast period. Asia-Pacific is the fastest-growing automotive manufacturing and real estate sector, with high demand for passenger vehicles, HCVs, and LCVs, due to the highest population and growth rate. With the growing use of automobiles in Asia-Pacific, the demand for HCVs and LCVs is growing in the region. Asia-Pacific is the largest producer of automobiles and associated raw materials and finished products in the world due to the presence of many passenger vehicles, HCVs, and LCV manufacturers. Countries in Asia-Pacific, including China and India, are at the forefront of investing in the renewable energy sector, increasing demand for HCVs and LCVs in the construction sector, collectively driving the Asia-Pacific tool steel market. Construction investments are driven by the economy's growing emphasis on developing new infrastructure and renovating aging buildings. Compared to the global average of 25.44%, the value added by the construction sector in India and China was approximately 26.49% and 40.54%, respectively. China and India are strengthening industrialization to boost exports, increasing passenger car, HCV, and LCV use in these sectors, and extending tool steel demand and market growth. Changing product purchase behavior turning to the e-commerce sector across Asia-Pacific and favorable government policies are likely to fuel the future development of the food and packaging sector. For example, Made in China 2025 is a ten-year national plan intended to enable China to transform into a global manufacturing power expected to boost product export from China, ultimately escalating demand for food and packaging as a marketing and customer service strategy. India and China are at the forefront of product advancement, where numerous packaged food brands are launched, further supporting the Asia-Pacific market.

Europe is the second largest region. It is estimated to reach an expected value of USD 2085 million by 2030 at a CAGR of 3.2%. Europe is one of the regions that is technologically ahead of its time and is highly dependent on logistics fleets, passenger vehicles, HCVs, and LCV and overall aerospace and automotive industry for effective import and export of raw materials and finished products for commercial construction projects. In terms of consumption, due to Europe's high import frequency and dependency on imports from different regions, the European economy is rising with the rising logistics industry. This has boosted the need for tool steel and raised the demand for automobiles on the European market. For instance, the European Commission established GEAR 2030 on January 26, 2016, a high-level group to ensure a unified strategy to address the European automobile industry's difficulties. Government initiatives to address the challenges faced by the automotive industry are expected to support the overall growth of the tool steel market across Europe. Moreover, demand for passenger vehicles is increasing across Europe with an increasing pool of traveling and daily commuting passengers. By 2050, European Union desires 50% of Europe to function on renewable energy, where the offshore wind energy sector has tremendous scope for growth. Increasing investment in the renewable energy sector across Europe has kicked off construction projects increasing demand for HCVs and LCVs, increasing the demand for tool steel in the overall market, boosting the market growth. Rapidly changing lifestyle trends, adoption of western culture and drinking habits, and rising adoption of packaged food products are some of the prime factors for increasing demand for packaged food in Europe. In addition, growing competitive edge in the European market and manufacturers managing the competitive advantage with the help of efficient strategies are expected to boost the European market further.

North America is the third largest region. North America, one of the largest automobile manufacturing hubs globally, is significantly supporting the growing demand for automotive with rising demand for tool steel. Increased passenger vehicle, personal vehicle, EV, HCV, and LCV manufacturing has also surged demand for tool steel parts in the North American market. Increasing income for automotive and tool steel part manufacturers through partnership and collaboration agreements is predicted to enhance the overall growth of the North American market as the number of autos made in the region continues to rise. The logistics and products supply chain market in North America is significantly growing, adding new delivery vehicles, HCVs, and LCVs to the fleet every year. This has surged demand for tool steel tremendously in North America. Moreover, State-to-state import and export are primarily based and dependent on a strong supply chain, which is expected to leverage demand for tool steel in the region, driving the market. High adoption of packaged food products across North America, especially in the U.S., supports the overall growth of the North American market. The presence of globally recognized packaged food product manufacturers in North America is a fueling factor in the North American tool steel market growth.

Segmental Analysis

The global tool steel market is segmented by product, product type, and region.

Based on Product, the global market is segmented into die work, injection molding, and others. The die work segment dominated the market and is estimated to register a CAGR of 5.1% during the forecast period. The fabrication of press-working dies comprises most of the work done in tool and die shops. Most press-working dies are used to fabricate sheet metal parts ranging in size from the finger stop on a dial telephone to the panels of an automobile body. Each press working die consists of two sections, called punch and die, or male and female. Tool steel offers excellent resistance to wear and tear and abrasion and is used in long-run applications when resistance to wear is required. Such properties drive segment growth.

The other segment is the second largest. Other products segment comprises hand tools, jackhammer parts, and pneumatic tools. Manufacturing industries use different tool steels for various purposes, either as a part of the manufacturing process or as a part of the final product. Hand tools, jackhammer parts, and pneumatic tools are all made with different grades of tool steel, usually in the range of 0.5% to 1.5% carbon. Vanadium, chromium, tungsten, and molybdenum are added in different proportions to achieve more specific properties. Such applications drive segment growth.

Based on Product Type, the global market is segmented into tungsten, chromium, vanadium, and others. The tungsten segment is the fastest growing and is estimated to grow at a CAGR of 5.1% during the forecast period. There are numerous uses for tungsten in the production and assembly of automobiles. For studs in tires, wheel bearings, brakes, crankshafts in high-performance cars, and other mechanical parts that must withstand intense use or high temperatures, the automotive industry uses pure tungsten, its compounds, or carbides. Tungsten is suitable for cutting and shaping metal components because of its strengthening properties and wide temperature range. Tungsten increases wear resistance by about 4% and 1.5%, respectively, when combined with high-carbon materials. It is employed in creating delicate equipment like drills, reamers, and milling cutters, which should promote market expansion.

Recent Developments

• September 2022 - high-performance materials and sophisticated special forgings from voestalpine are indispensable in the aircraft models of the world's largest manufacturers. Only recently, the High-Performance Metals Division of the voestalpine Group secured a contract extension and several new and extensive orders for the supply of heavy-duty structural parts from American airplane manufacturer Boeing. In addition, the prestigious Munich-based company MTU Aero Engines has commissioned voestalpine to supply critical forged parts over the coming years for installation in various aircraft models, including the Airbus A320neo. The total volume of orders to 2030 amounts to around three hundred million euros
• October 2022 - voestalpine is successfully expanding its position as a technology and innovation leader and has budgeted around EUR 196 million for research and development (R&D) in the current business year. The steel and technology group appreciates that R&D projects positively contribute to sustainability. Research priorities include digitalizing the production processes, developing innovative products, and converting to climate-neutral steel production.