Analysis of the current market situation and development trend of China's tool industry in 2020 The degree of localization is expected to increase

In 2019, due to the intensification of Sino-US trade conflicts and the continued decline of downstream industries such as automobiles, my country's tool consumption declined. After 2012, the proportion of my country's annual tool consumption to the annual machine tool consumption showed an upward trend, reaching 25% in 2019, indicating that my country's tool consumption is improving in quality, but it is still far lower than that of developed countries.

The total consumption of the domestic tool market continues to rise

The consumption status and structural changes of the tool market are the barometer of the development of my country's manufacturing industry. After the total scale of cutting tools in my country experienced fluctuations from 2012 to 2016, with the implementation of the "13th Five-Year Plan", the manufacturing industry has rapidly moved towards automation and intelligence, and the transformation and upgrading of the manufacturing industry has promoted the rapid development of the cutting tool industry. From 2016 to 2018, my country's annual consumption scale of cutting tools showed a significant and rapid increase. In 2018, the total annual consumption of tools reached 42.1 billion yuan, surpassing the high of 40 billion in 2011, setting a historical record. In 2019, due to the intensification of Sino-US trade conflicts and the continued decline of downstream industries such as automobiles, my country's tool consumption declined.

my country has been the world's largest machine tool consumer for many years, but its tool consumption level is relatively low. In developed countries such as Germany, the United States, and Japan, the law of harmonious and balanced development of modern CNC machine tools and CNC tools is very obvious. According to statistics, tool consumption in developed countries is about 50% of machine tool consumption. With the improvement of domestic enterprise management awareness and technical strength, more and more enterprises have begun to invest in automated processing systems, and the consumption of CNC tools has gradually increased. After 2012, the proportion of my country's annual tool consumption to the annual machine tool consumption has shown an upward trend, reaching 25% in 2019, indicating that my country's tool consumption is improving in quality, but it is still far lower than that of developed countries. It can be seen that there is still a lot of room for improvement in my country's tool consumption level.

The proportion of cemented carbide tool production is gradually increasing

The change in the supply structure of tool materials in my country is related to the development level of my country's manufacturing industry. In recent years, the production structure of cutting tools in my country has undergone continuous changes, and the proportion of cemented carbide tools with better comprehensive performance has been increasing. According to statistics from the my country Machine Tool Industry Association, the output of carbide tools produced by major tool companies in my country increased from 39% in 2015 to 47% in 2019. Carbide tools are the leading tools involved in digital manufacturing, and the increase in their output share is related to the micro-background of the CNC upgrade of my country's machine tool equipment. In the future, as my country's manufacturing industry continues to upgrade, the output share of carbide tools will gradually increase.

Import dependence continues to decline

At present, the development of the national economy has entered a new normal of medium-to-high-speed growth. The rising costs of production factors such as labor, raw materials, and power have made the operation of the manufacturing industry more and more difficult. "Reducing production costs and improving production efficiency" has become the consensus of many domestic manufacturing companies. In recent years, domestic tool companies have risen rapidly. Relying on cost-effectiveness and local service advantages, they have replaced some imported products and accelerated the localization of CNC tools.

In 2019, my country's total tool consumption reached 39.3 billion yuan, of which the annual consumption of domestic tools was about 25.7 billion yuan and that of imported tools was about 13.6 billion yuan. Although domestically produced cutting tools dominate my country's cutting tool consumption market with a market share of 2/3 in terms of total volume, they are generally dominated by mid- and low-end products. Among the 13.6 billion yuan of imported cutting tools, the vast majority are high-efficiency cutting tools urgently needed by modern manufacturing. The ZTE incident sounded the alarm for my country's manufacturing. The lack of core technologies in key links will inevitably restrict the vigorous development of my country's high-end manufacturing industry. As CNC cutting tools used in high-end equipment manufacturing, accelerating their localization is of great significance to the security of the national economy. According to statistics from the my country Machine Tool Industry Association, the proportion of imported cutting tools in total consumption decreased from 37.17% to 34.61% from 2016 to 2019, which to a certain extent shows that my country's self-sufficiency in CNC cutting tools is gradually increasing, and its dependence on imports is decreasing year by year.

In the future, my country's cutting tool industry will show the following development trends:

-The adjustment of cutting tool consumption structure is accelerating, and the demand for CNC cutting tool consumption is increasing. my country is the country with the richest reserves of tungsten ore resources in the world, but the level of tungsten resource utilization is not high. There are many enterprises engaged in the manufacturing of cemented carbide products and cutting tools nationwide, but most of them are small in scale and mainly target the low-end market. As my country's industrial policy promotes the extension of cemented carbide to the direction of deep processing, the structure of cemented carbide products and cutting tools is being further optimized, and the proportion of deep processing products represented by CNC blades will further increase.

——Replacing imports and localization are the primary development directions of my country's cutting tool industry. During the "13th Five-Year Plan" period, my country proposed the "Made in my country 2025" and "Internet +" action plans to promote the upgrading of my country's manufacturing industry to automation and intelligence and improve the level of digital manufacturing. CNC cutting tools are an integral part of digital manufacturing and a key means to improve labor productivity and quality. They play a "four-two-pound" role in saving manufacturing costs. The dependence on imports of high-end CNC cutting tools is related to national economic security and national defense security, and is an obstacle to my country's becoming a manufacturing power.

At present, most of my country's cutting tool companies produce low- and medium-end products mainly based on traditional standard cutting tools, and the supply of CNC cutting tool products that adapt to the development trend of digital manufacturing is insufficient. In recent years, the product structure adjustment of my country's tool companies has made certain progress, replacing some imported products in a single field, but it is difficult for domestic tools to replace imports in the short term.

——The market concentration of the tool industry will gradually increase. In developed countries, tools grow along with digital manufacturing. With the improvement of the manufacturing industry's understanding, use and requirements for tools, tool materials have experienced an upgrade from carbon tool steel and high-speed steel to cemented carbide and superhard materials. Tool technology, R&D, marketing, and service systems are more complex than before. It is becoming more and more difficult to imitate tools, and the requirements for independent innovation are getting higher and higher. The survival and development environment of small tool companies is getting smaller and smaller. In the future, with the evolution of tool technology, small companies will not be able to continue to invest in R&D in tool materials, coatings and other fields, and will be at a disadvantage in market competition, and will inevitably be eliminated by industry leaders.