Abstract: A powder metallurgical method is described for producing precision components of sintered steel having high strength and high ductility by compressing a powder to form a green compact and sintering the latter at a temperature from 950.degree. to 1250.degree. C. for 5 to 90 minutes in a reducing atmosphere of partially combusted hydrocarbons, sufficient carbon being present to impart a carbon content of 0.05 to 0.6% by weight in the sintered steel; said powder consisting essentially of iron powder containing 0.65 to 0.8% phosphorus, 0.1 to 0.5% graphite or carbon powder, and 0 to 1.5% of a solid lubricant.