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Tool companies need to increase product price
In the current landscape, China's cutting tool companies are still grappling with several critical challenges that hinder their development. If these issues aren't properly addressed, they could significantly impact the long-term growth and competitiveness of the industry.
At present, the technological content of many tools remains low. In developed countries, carbide cutting tools have taken over as the dominant type, accounting for up to 70% of the market. Meanwhile, high-speed steel tools are gradually declining, with their share now below 30%, down from 1% to 2% annually. This shift highlights a growing demand for more advanced and efficient cutting solutions.
Luo Baihui, secretary-general of the International Mould & Hardware & Plastics Industry Suppliers Association, noted that carbide cutting tools have become essential in China’s manufacturing sector, especially in industries like automotive, mold making, and aerospace. However, domestic manufacturers are still producing large quantities of high-speed steel tools and basic standard cutting tools without considering actual market needs or saturation. As a result, the high-end, high-value segment of the market has been largely left to foreign competitors.
According to recent data, China’s annual cutting tool sales amount to approximately 38.5 billion yuan. Yet, the share of cemented carbide tools is less than 25%, despite the fact that over 50% of the cutting tools required by Chinese manufacturers are actually carbide-based. This mismatch has led to a gap in the mid-to-high end market, which foreign companies have quickly filled.
Additionally, the value of low-end products remains a concern. In 2007, China produced 16,500 tons of hard alloys, with 4,500 tons used for cutting tools—comparable to Japan’s output. However, the value of the finished tools was only $800 million, far behind Japan’s $2.5 billion. This clearly shows that China still lags behind in producing high-performance carbide cutting tools.
As domestic companies struggle to meet the rising demand, the reliance on imported high-end tools continues to grow. Major foreign tool suppliers in China are seeing an average annual growth rate of 30% in the high-end market, outpacing the growth of local tool manufacturers. This trend underscores the urgent need for innovation, quality improvement, and strategic production adjustments within the domestic cutting tool industry.