
Of course steel is the heart of the knife. Steel is
made in a wide variety of types depending on it's intended use. Not all steels
are suitable for knives and some types are preferred over others because of
their specific properties. The most commonly asked question is "What is the best
knife steel?" . That is an impossible question to answer because different
performance properties are primarily important to different people. The
preferred steel characteristics for a big chopper may be very different than for
a small folding knife.
In the simplest terms, steel is iron with carbon. Carbon is what makes the steel hard. Too much carbon will make the steel very hard but also brittle and more prone to breaking, cracking, or chipping.
Other alloys are added to make the steel perform
differently. Some of the important elements of knife steels are listed below.
Carbon: Present in all steels, it is the most
important hardening element. Also increases the strength of the steel but, added
in isolation, decreases toughness. We usually want knife-grade steel to have at
least 0.5% carbon, which makes it "high-carbon" steel.
Chromium: Added for wear resistance, hardenability, and (most importantly) for corrosion resistance. A steel with at least 13% chromium is typically deemed "stainless" steel, though another definition says the steel must have at least 11.5% *free* chromium (as opposed to being tied up in carbides) to be considered "stainless". Despite the name, all steel can rust if not maintained properly. Adding chromium in high amounts decreases toughness. Chromium is a carbide-former, which is why it increases wear resistance.
Manganese: An important element, manganese aids the grain structure, and contributes to hardenability. Also strength & wear resistance. Improves the steel (e.g., deoxidizes) during the steel's manufacturing (hot working and rolling). Present in most cutlery steel except for A-2, L-6, and CPM 420V.
Molybdenum: A carbide former, prevents brittleness & maintains the steel's strength at high temperatures. Present in many steels, and air-hardening steels (e.g., A-2, ATS-34) always have 1% or more molybdenum -- molybdenum is what gives those steels the ability to harden in air.
Nickel: Adds toughness. Nickel is widely believed to play a role in corrosion resistance.
Phosphorus: Present in small amounts in most steels, phosphorus is a essentially a contaminent which reduces toughness.
Silicon: Contributes to strength. Like manganese, it makes the steel more sound while it's being manufactured.
Sulfur: Typically not desirable in cutlery steel, sulfur increases machinability but decreases toughness.
Tungsten: A carbide former, it increases wear resistance. When combined properly with chromium or molybdenum, tungsten will make the steel to be a high-speed steel. The high-speed steel M-2 has a high amount of tungsten. The strongest carbide former behind vanadium.
Vanadium:
Contributes to wear resistance and hardenability, and as a carbide former (in
fact, vanadium carbides are the hardest carbides) it contribute to wear
resistance. It also refines the grain of the steel, which contributes to
toughness and allows the blade to take a very sharp edge.
The performance properties important to knives are generally described below:
Wear resistance: As the name implies, the ability to resist abrasive wear.
Strength: (Hardness) The ability to take a load without permanently deforming.
Toughness: The ability to take an impact without damage, by which we mean, chipping, cracking, etc.
Edge holding: The ability of a blade to hold an edge.
Stain resistance (rust resistance).
Strength and toughness are often confused and many people think that the harder the steel, the better. In fact, blade steel must have some "softness" for flexibility or it will likely snap in two. This is more important larger blades. A properly made sword will flex and bend (but not deform) instead breaking.
The type of steel is not the whole story. Proper, or improper, heat treatment and tempering can literally make or break any steel. I buy steel in bars ("bar stock") or billets. I get it in a relatively "soft" annealed stage.
Annealed steel is easier to grind and shape. Once a blade is ground, it is "heat treated" in a specific manner in a high temperature kiln, usually around 1800-1900 degrees Fahrenheit for a specific duration. The red hot steel is then quenched (cooled) in a specific manner. At this point the steel is very hard but somewhat brittle. The steel is then tempered by heating it again to a lower temperature, usually around 425 degrees Fahrenheit, to "draw temper" it and give it some flexibility.
I say all of this is done in a "specific manner" because each type of steel must be heat treated and tempered in it's own specific way to achieve optimum performance.
A lower grade steel, properly heat treated, can out-perform an improperly heat treated superior steel. I cannot stress enough that proper heat treating is essential and critical to the performance of the steel.

I use a variety of steels for my blades including 440C stainless, D2 (near stainless tool steel), Sandvick 13C26 stainless and Alabama Damascus. By far, my most commonly used steel is 440C stainless. I will make your knife with whatever steel your prefer. I do not normally stock much non-stainless steel but I can order it as needed. Other good knife steel choices include 154 CM, CPM 154, ATS -34, 1095 (non-stainless). I can also use CPM S30V or CPM S60V if you are willing to pay a lot more for the steel.
440C Stainless Steel
Carbon: 0.95-1.2, Manganese: .45, Chromium: 16-18, Molybdenum: .50-.75. Rockwell
Hardness: 57-58

I believe that this is one of the most versatile and best all-around knife steels there is. It hardens to a good 57-58 hardness on the Rockwell scale so it is very well suited to knives. It takes a very good edge and holds it reasonably well. When it does dull, it is relatively easy to sharpen. Being stainless, it is very resistant to rusting or staining.
Grade 440C is capable of attaining, after heat treatment, the highest strength, hardness and wear resistance of all the stainless alloys.
NOTE: Any steel, even stainless steel, is rust and stain resistant but not rustproof. It will stain and rust if stored in contact with moisture or acidic materials (including leather over long periods).
With minimal care, such as keeping it clean and dry, 440C stainless will keep it's beautiful finish indefinitely. Polishing it with Renaissance Wax or SemiChrome Polish will help protect it.
Note: There are multiple grades of 440 stainless steel and they perform very differently. 440A and 440B are VERY different and generally considered to be much lower quality knife steels than 440C. If you see a knife advertised only as "440 Stainless" or "Surgical Stainless Steel" it is most likely to be 440A, 440B, or 440J stainless steel. These lower grades are very rust resistant and is sometimes preferred in diving knives because of that, but in general they are not as hard and will not hold an edge nearly as well as the more expensive 440C stainless steel.
I have been using this steel for a couple of years and I am very pleased with it. I buy the steel billets made by Brad Vice in Wellington, Alabama. Damascus steel is made from several layers of different types of steel that are forge welded together and then folded several times.

The Alabama Damascus that I use is made from (4) layers 5160 spring steel, (3) layers203E low carbon high impact High nickel mild steel alloy, (3) layers 52100 ball bearing steel, and (3) layers 15N20 band saw blade material. These 13 layers of 4 types of steel are forge welded and then folded 5 times to achieve 416 layers. The nickel content gives it a beautiful bright pattern that makes it a favorite knife steel.
Sandvik 13C26 Stainless
Steel
Carbon: 0.7%, Chromium: 13%, Silicon: 0.4%, Manganese 0.7%

Sandvik 13C26 is a Swedish stainless steel developed for knife and edge applications where sharpness and edge retention is the main focus. The fantastic sharpness made available with 13C26 is possible because of the very fine microstructure and high level of purity. The high concentration of small carbides enables high wear resistance, edge stability and resistance to micro chipping. Together with 60+ Rockwell hardness, this results in a knife with very good edge retention. A knife made of Sandvik 13C26 is stainless in normal use. It provides extremely tough corrosion resistance.
13C26 was designed as a razor blade steel it sets a high standard for edge stability and is thus an ideal stainless steel for those who desire a high initial sharpness and keep their blades very sharp.