I. Market Recovery and Structural Growth
In the first quarter of 2025, the CNC tool market showed a remarkable recovery trend. According to the data from dealers in East China, the shipment volume of CNC inserts in March increased by more than 30% year-on-year, and in South China, the growth rate was 10%. This is due to the differentiation of downstream application fields: high-end fields such as new energy (lithium battery equipment, photovoltaic module processing), military industry (aero-engine blade manufacturing), and robotics (precision processing of joint reducers) have strong demand growth, while the traditional construction machinery field remains stable. There are regional differences in the market inventory cycle. The inventory cycle in East China has been compressed to 2-3 months, and in South China, due to logistics factors, it still remains at 4-5 months. In-depth data shows that in the first half of 2024 (H1), the sales volume of CNC inserts of Huarui Precision increased by 21.8% year-on-year, and the gross profit margin of cemented carbide tools reached 34.2%, verifying the trend of product structure moving towards high-end.
II. Reconstruction of the Competition Pattern: From Price War to Value Competition
There has been a fundamental change in the industry’s pricing strategy, and leading enterprises have formed a tacit agreement of “maintaining prices rather than quantity”. Leading enterprises such as Zhuzhou Diamond and Xiamen Golden Egret have improved their premium capabilities through technological upgrading. For example, the service life of the T-series coated inserts of Zhuzhou Diamond is 15% longer than that of international brands, and the price is only 80% of that of international brands. Xinrui Co., Ltd. has built a product matrix of “standard inserts + non-standard integral tools” by acquiring Zhuzhou Weikai and Timar Tools. The unit price of its high-temperature alloy machining tools reaches 45 yuan per piece, with a premium of 60% compared with traditional products. The market concentration continues to increase, and the CR5 has increased from 32% in 2020 to 48% in 2024. However, there is differentiated competition in segmented markets: Huarui Precision has a market share of 18% in the automotive field, and Oukeyi has a market share of 22% in the mold processing field.
III. Technological Breakthroughs and Deepening of Import Substitution
Domestic tool enterprises have achieved breakthroughs in materials science and coating technology:
- Innovation in matrix materials: The K-series ultrafine-grained cemented carbide (grain size 0.2μm) developed by Xiamen Golden Egret has a bending strength of 5,800MPa, exceeding that of similar products of Sandvik by 12%;
- Iteration of coating technology: The TiAlSiN composite coating of Zhuzhou Diamond increases the service life of the tool by 3 times and has replaced 80% of the market share of Mitsubishi of Japan in titanium alloy processing;
- Precision manufacturing process: Zhuzhou Weikai of Xinrui Co., Ltd. uses a fully enclosed grinding center, and the edge accuracy is controlled within ±2μm, reaching the level of LMT of Germany.
Technological breakthroughs have promoted the import substitution rate to increase from 31% in 2020 to 52% in 2024, especially in the aerospace field. The proportion of domestic tools in the machining of the C919 airframe has reached 65%.
IV. The Industrial Synergy Effect of Emerging Application Scenarios
The robotics industry has become the core driving force for tool upgrading. The micro ball nose milling cutter (diameter 0.5mm) developed by Huarui Precision has been introduced into the processing of the finger joints of Tesla Optimus, and the qualified product rate has increased from 78% to 92%. Through the non-standard tool solutions of Timar Tools, Xinrui Co., Ltd. provides the processing tools for the housing of the harmonic reducer of the Zhiyuan Expedition A1 robot, and the processing efficiency has increased by 40%. Data shows that the demand for tools in the robotics field increased by 85% in 2024, and the value of tool consumption per humanoid robot reached 1,200 yuan. The collaborative R&D mode (such as joint laboratories) between tool enterprises and mainframe manufacturers has shortened the new product development cycle to 4 months, which is 2 times faster than the traditional mode.
V. Vertical Integration of the Industrial Chain and Global Layout
Leading enterprises have achieved full industrial chain control through mergers and acquisitions:
- Upstream resource integration: Xiamen Golden Egret, controlled by Xiamen Tungsten Co., Ltd., has achieved a 100% self-sufficiency rate of tungsten powder, and the cost is 18% lower than that of purchased powder;
- Overseas market breakthrough: After Xinrui Co., Ltd. acquired Drillco in Chile, the revenue share of the South American market increased from 9% to 23%, and the gross profit margin of mining drilling tools reached 52%;
- Service mode innovation: Zhuzhou Diamond has launched the “Tool as a Service” (TaaS) mode, which has reduced the customer’s processing cost by 25%, and the contract amount has increased by 70% year-on-year.
In 2024, the export value of tools reached 3.8 billion US dollars, an increase of 29% year-on-year, and the proportion of the Southeast Asian market increased to 41%.
In-depth Insights
- The double-helix effect of technology and market: Domestic tool enterprises have broken through the blockade of international brands through the path of “application scenarios forcing technological innovation → technological premium supporting market expansion”;
- Reconstruction of the resilience of the industrial chain: Transforming from a “single tool supplier” to a “processing solution provider” to improve customer stickiness and gross profit level;
- Geopolitical dividends: The export restrictions of high-end machine tools from Europe and the United States to China have accelerated the adaptation and verification of domestic tools on five-axis machining centers. In 2024, the self-sufficiency rate of domestic five-axis tools exceeded 40%.
Conclusion
China’s CNC tool industry is undergoing a key transformation from scale expansion to quality improvement. Technological breakthroughs and industrial chain integration have given birth to a multi-polar competition pattern, and emerging fields such as robotics and new energy provide strategic opportunities for domestic substitution. In the future, the focus of competition will be concentrated on the research and development of superhard materials (such as diamond-coated tools) and the construction of an intelligent service ecosystem. Breakthroughs in these two fields will determine whether China can achieve the goal of accounting for 25% of the global tool market share by 2030.
Post time: Mar-21-2025