In recent years, the number of high-speed and high-efficiency CNC machine tools and machining centers in China's manufacturing sector has seen a significant rise, leading to an increasing demand for advanced cutting tools. Modern, efficient cutting tools are gradually becoming the dominant force in the market. However, the current imbalance in tool structure in China is not aligned with actual production needs or market demands. This misalignment has created a situation where the production of high-performance, cutting-edge tools is essential to drive meaningful changes in the industry.
China’s annual tool sales amount to around 14.5 billion yuan, but cemented carbide tools account for less than 25% of that figure. This is far from the global standard and does not meet the growing domestic demand for such tools. In fact, within the domestic manufacturing sector, more than 50% of cutting tools are now made of cemented carbide. The mismatch between supply and demand has become a serious issue, resulting in a surplus of high-speed steel tools being sold at low prices, either domestically or abroad, while high-performance hard alloy cutting tools continue to rely heavily on imports.
From 2001 to 2005, import values for these advanced tools increased from $900 million to $450 million (approximately $3.6 billion), highlighting the gap in domestic production capabilities. This structural imbalance means that the tools produced do not match the actual needs of users. For instance, there is a large demand for carbide tools, yet high-speed steel tools are overproduced. Similarly, modern manufacturing requires high-efficiency cutting tools, but the market is flooded with low-grade, standard tools.
In developed countries, cemented carbide tools currently make up about 70% of the total tool market, while high-speed steel tools are declining by 1-2% annually, now below 30%. Super-hard tools like diamond and cubic boron nitride account for roughly 3% of the market. In contrast, China produces approximately 80,000 tons of high-speed steel each year, making up about 40% of global output. This heavy reliance on high-speed steel consumes large amounts of rare resources such as tungsten and molybdenum, leading to overproduction and low-value sales.
China also produces 16,000 tons of cemented carbide annually, accounting for about 40% of global output. However, the highest value-added segment—cutting inserts—is only around 3,000 tons, or 20% of total production. This underutilization of hard alloy resources highlights both a lack of domestic demand and inefficiencies in resource allocation.
Economically, China’s annual revenue from cemented carbide is about $560 million. Japan, which produces only 40% of what China does, generates $2.633 billion in sales, with 72% coming from cutting tools. This demonstrates how efficiently Japan utilizes its resources and how much China can learn from this model. By focusing on innovation, quality, and efficiency, China’s tool industry can move toward a more sustainable and competitive future.
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