To increase the hot forming process capability and the quality of powder metallurgically produced "micro clear"-HSS grades it is indispensable to understand the relevant microstructural phenomena during the forming process. With this objective, numerical flow curve models and processing maps have been applied to describe the workability and the microstructural evolution during the deformation of a new powder metallurgically produced HSS grade in an as-hipped start condition. The routines which describe the deformation behavior are based on experimentally, determined flow curves in the strain rate range of 0.01 to 100 /s and at temperatures between 900 and 1150 degreesC. In this special case of a matrix-particle composite structure the flow stress with respect to strain rate does not obey the classical power law over the full process-relevant strain rate range. So a detailed analysis of the work-hardening and dynamic softening behavior together with the corresponding efficiency of power dissipitation and the appearance of flow instabilities make an understanding of the metallurgically relevant changes in the microstructure possible. In addition, microstructural observations of deformed specimens could explain the damage mechanism inside regions of flow instabilities and flow localization by pore formation and interfacial cracking at temperatures which are too high or too low. For high strain rates, such as occur during the final sequences of rod rolling, the "speed limit" regarding critical flow localization with short time overheating in the areas surrounding particle clusters could be derived as an important process control parameter.