Steel lump

Steel lump
Creation

Activate iron lump (> 0.20kg) Right-click Glowing hot charcoal (> 0.20kg) Open submenu "Create > Resources"
Result
0.40kg Steel lump
Skill and improvement
Uses metallurgy skill Cannot be improved
Properties
Can be combined when glowing hot.

Description

A heavy lump of dark steel.

A minimum of 0.20kg for both iron and coal is needed for creation. For both materials, regardless how large a bundle is only 0.20kg is used.
A success consumes 0.20kg iron, 0.20kg of coal and results in a 0.40kg steel lump.
A failed attempt decreases both the charcoal and the iron lumps weight by 0.04kg.
The quality of the charcoal affects the success chance as well as the likelihood the lump will be high quality. It would be wise to not risk wasting high quality iron on poor charcoal unless you have a lot of it.
The quality of the iron lump caps the quality of the steel lump.
Only the charcoal needs to be glowing hot.
As of this patch, steel items now take reduced damage on use. Steel pickaxes take 20% less damage from use than similar quality iron pickaxes. Tested 7/11/2012 on Celebration server using QL 1 steel and iron pickaxes. The iron pickaxe took 0.15 damage every 5 seconds while the steel pickaxe took 0.12 damage. Thus 0.12/0.15 = .80 for a 20% damage reduction.
Enchantments on tools made of steel will decrease slower as it is connected to the damage taken by the tool. (Steel tools take less damage than iron tools)