A knowledgeable friend of mine who knows quite a bit of Japanese culture and history had told me this in the past, but has never given me any specific source. With the initial question he also said that this attributed to Japan's lack of resources, as they put many into simply making swords. Is any of this true and to what extent?
Well logically if that were the case, the Japanese would never have been able to make metal armour or metal arrowheads or anything metal. However, if we take a step further, we can also break this down into a couple more reasons.
Swords weren't all that common until the Edo period (1603 - 1868) as other weapons were much more preferred on the battlefield, and even during and after the Edo the use and ownership of swords was restricted. During most of feudal Japan, weapons such as the spear, polearm, or bow were still the stronger weapons on the battlefield (and later on this pool increased for firearms).
Also - whilst, yes, there was a relative scarcity of good quality iron in Japan in comparison to various other areas of the world, that isn't to say that they had none at all. The Japanese had access to iron sand, a sedimentary deposit found in riverbeds and mountains that contained iron. This iron was low quality and hard to refine to a specific percentage of the overall blade, hence the more elaborate techniques developed by Japanese swordsmiths. It wouldn't really be valid to suggest that Japan had a lack of resources either - they didn't have top quality iron, but they did have silver, and leather or rawhide as well, despite not being part of the Asian land-continent.
In terms of metal, only iron and steel. Iron converted into steel, naturally.
The Japanese have the mystic quality about them that is somehow believed, as if bladesmiths in Europe didn't know an anvil from a pair of tongs.
It's important to realise that everybody back then was a professional, and working on (literally) the cutting edges of science and fashion.
Japanese smiths would hammer away at their metal to improve the quality, which is why they had to hammer it so much. 300 years earlier, the viking smiths are taking two long, red hot pieces of metalled braiding them together. Europeans knew how to make a sword.
However, this being said, the style in which japanese smiths made swords did actually mean that they were "stronger" than European swords, because the Japanese tempered the cutting edge less. This means that the blade is harder than the spine of the sword, whereas in Europe, swords were made of steel with similar characteristics throughout (monosteel). This means that a Japanese sword will bend with slight misuse (poor edge alignment, for example), while European swords will bend AND flex.