From Watanabeblade.com
The Steel Used In Japanese Knives
When people talk about traditional Japanese knives, you may hear them say that the knives were made from "white (Shiro in Japanese)" steel or "blue (Ao)" steel. Alternatively, they might say "white paper (Shiro Kami)" steel or "blue paper (Ao Kami)" steel. These are not technical standards but refer to the color of the labels that Hitachi uses for some of their commercial grade steels. Among Japanese manufacturers, these become "Blue Label #1," "White Label #2," and so on. Both types are high-carbon steels in the 1.0% to 1.2% carbon range alloyed with silica (0.1% to 0.2%) and manganese (0.2% to 0.3%). The "blue paper" steels also have chromium (0.2% to 0.5%) and Tungsten (1.0% to 1.5%) added for toughness. Japanese manufacturers routinely produce knives from these steels in the Rc62 to Rc64 range, substantially harder than any Western-style blades.
For the soft-steel back, they use a very low carbon steel (0.06%) with a bit of silica and manganese (both at 0.2%). The highest-quality tools still use wrought iron from old anchors or anchor chain as the backing material.