First this is a link to modern steel making.
My sugestion is to put scrap steel or small steel tools in a cruciable with iron instead of coal then smelt it like normal resulting in “High Quality Steel” which then could be forged into the basic tools like normal.
These tools should have more uses then a base tool. Im thinking at least double the uses of a normal tool.
Also if we make a knife out of it maybe it looks cooler? Or just make it so high quality blades cant be made into a knife and only shears.