Steel is a pretty awesome metal. Made by placing coal ore on either side of an iron ore in a smelter, it touts both greatly increased stats and many more uses. However, a smithing level of 30 is required to make the metal into bars, and even higher levels are required for the more advanced items.
Stats[]
Steel has the same stats as diamond. Holy shit! However, steel tools only have 500 uses (700 for a scimitar,) so don't use them too frivolously.