Traditionally, the steel used in Japanese and Ninja sword making is ‘Tamahagane‘.

Tamahagane

Steel is produced by combining iron with carbon. Carbon is  essential in sword making as without it iron on its own would be too soft to keep an ‘edge’ for cutting. Steel can be manipulated, stretched and bent without snapping, to different degrees all due to the amount and ratio of carbon and iron it contains and the heat processes it is subjected to.

The more carbon in the iron, the harder the eventual steel becomes. However, there is a delicate balance needed here that needs to be observed: too much carbon will make the steel brittle and liable to break upon serious impact. The more carbon within the sword then the more likely it is to do this.

Over time, the optimum amount of carbon to iron ratio has been discovered and for Japanese swords that means a carbon content of around the 0.7% mark.

Satetsu

The iron content of a Japanese sword is derived from an oxygen rich, fine, black sand called ‘Satetsu’, a form of iron ore (Fe2O3 -two parts iron to three parts oxygen). The oxygen is removed during the smelting process.

The raw metal is never heated high enough to actually melt or become liquid and each sword smith will adjust the process to achieve his goal of the perfect blade to represent his skill.

Reference:
L & H. Kapp,Y.Yoshihara, (1987), “The Craft of the Japanese Sword”, Kodansha Europe Ltd.