This is not entirely impossible. Modern "differential hardening" creates a similar effect in high-end Japanese Katana (the Hamon line). However, the legends of Fuladh al Haami suggest a macro effect—a blade that never needed a whetstone.
Unlike normal steel, which must be forged in a furnace, legends claim that Fuladh al Haami possessed an internal, latent heat. It was said to be forged in the breath of a Simurgh (a mythical bird) or quenched in the blood of a serpent, giving it a perpetual warmth even in the coldest winter. Skeptics dismiss Fuladh al Haami as fantasy, but modern metallurgists are intrigued. The keyword here is High-Phosphorus Iron . fuladh al haami
If you ask a historian: Yes, but metaphorical. The legend was used to sell expensive swords. This is not entirely impossible