The development of free-cutting steel is inseparable from the development of environmentally friendly alloy elements and the control of inclusions shape. Alloying elements can affect the composition, morphology, size, and distribution of inclusion, which are the main factors affecting the machinability of free-cutting steel. This study selected sulfur free-cutting steel with different chemical compositions as the research object to examine the effects of bismuth and bismuth tellurium on sulfur-containing free-cutting steel through electrolytic corrosion experiments, metallographic microscopy, scanning electron microscopy, energy spectrum, and electron backscattering analyzer. The results showed that the microstructures of free-cutting-steel containing sulfur, free-cutting steel containing sulfur bismuth, and free-cutting steel containing sulfur bismuth tellurium are composed of ferrite, pearlite, and inclusions. The inclusions in sulfur-containing free-cutting steel are chain, cluster, and a few dotted MnS. The inclusions in sulfur-bismuth free-cutting steel are point and a few dotted MnS. After the addition of Te, the number of dotted inclusions is reduced, while the number of chain and cluster inclusions is increased. Most of the inclusions in bismuth-containing free-cutting steel are flake inclusions, and the class II MnS change into class III MnS, which is beneficial for improving the free-cutting property of steel and to reduce anisotropy. With the addition of Te, MnS of other shapes, such as heart, water drop, butterfly, etc. of a length–width ratio of less than 4 also appeared as MnS and MnTe complex inclusions, and the fusiform manganese sulfide accounted for most of the steel. Both Bi and Te had modification effects on MnS.
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