At Google Books, you can preview Iron and Steel in Ancient Times by Vagn Fabritius Buchwald (Volume 29 of Historisk-filosofiske Skrifter, Det Kongelige Danske Videnskabernes Selskab, Copenhagen, Denmark, 2005) to find interesting information on ancient steel. For example, on page 72, I found this:
In the Homerian epic the Odyssey we have an exceptional hint at the blacksmith's cunning treatment of steel, when Odysseus with his men blinded the one-eyed Cyclops Polythemus. "And as when a smith dips a great adze in cold water amid loud hissing to temper it--for therefrom comes the strength of iron--even so did his eye his around the stake of olive-wood" (Odyssey, 9. song: 391. translated by A.T. Murray, Loeb Classical Library).Thus, the ancient book, The Odyssey, apparently refers to steel manufacturing that was known in the Mediterranean region well before the time of Lehi. Hardened steel was not common, though, and was used for only a few objects, including an occasional sword. A steel sword in Jerusalem in Nephi's day may indeed have been rare, but known, and thus it is entirely plausible for the Book of Mormon to mention a sword of a significant and wealthy military leader that was made of "the most precious steel" (1 Nephi 4:9). Not the whole sword, but the blade, where hard steel would be especially desirable.
The archaic period described in the Odyssean narrative is difficult to fit in time, since the Odyssey is a conglomerate of tales, first edited and issues as a total of 24 songs in the 4th century B.C. However, the general scarcity of iron and the common references to weapons of bronze point to the 8th or 7th centuries. No doubt, quench-hardening of steel as described in the epic had been well known for centuries before the poem was conceived. Hardening was, however, restricted to tools, particularly to knives, files, and chisels, only occasionally including a dagger, a sword or an axe.
The ancients in Nephi's day had the ability to carburize iron, but that does not mean that iron or steel was commonly available. The steel of Laban's sword was "most precious," clearly not a commodity item. In fact, subsequent appearances of iron in the Book of Mormon rate it with precious metals and riches rather than treating it as an ordinary material, as if metallurgical skills were largely lost in Nephite culture sometime after Nephi's era.
Incidentally, a photo of a gold-hilted sword with a blade made of meteoric iron is available in Volume 3 of the Encyclopedia of Mormonism under the article, "Sword of Laban." The sword comes from the tomb of Tutankhamun, who died in 1325 B.C., over 700 years before Nephi saw the sword of Laban. For more information on the ancient use of iron and steel prior to Nephi's time, see Oleg D. Sherby and Jeffrey Wadsworth, "Damascus Steels," Scientific American 252 (February 1985): 112-20; J. P. Lepre, The Egyptian Pyramids: A Comprehensive Illustrated Reference (Jefferson, NC: McFarland, 1990), 245; Immanuel Velikovsky, Ramses II and His Time (Garden City, NY: Doubleday, 1978), 222-37.
Another useful paper on ancient steel is "Steel in Ancient Greece and Rome" by E.A.Ginzel, 1995, available at the Materials Research Institute Website. Ginzel argues that early forms of steel were known and made by the ancients, though not well understood.
While most ancient works of iron or steel are not likely to survive because of corrosion, one recent well-preserved find of an ancient iron sword from the Middle East is reported by Avraham Eitan, "BAR Interviews Avraham Eitan: Antiquities Director Confronts Problems and Controversies," interview by Hershel Shanks, Biblical Archaeology Review 12/4 (1986): 30-38, as discussed in the new book, Pressing Forward with the Book of Mormon, edited by John W. Welch and Melvin J. Thorne, Provo, Utah: FARMS, 1999. A large iron sword, three feet long and about three inches wide was excavated at Vered Jericho (a place near Jericho in Israel). It has a bronze haft with a wooden grip. The strata from which the sword was excavated dates to the late seventh century BC. This sword is unlike the shorter daggers that are normally depicted in art from this part of the world. It provides evidence that iron (steel?) swords of large size were known in Nephi's day. (See also William J. Adams Jr., Journal of Book of Mormon Studies, Vol. 2, No. 2, 1993, pp. 194-195.)
Ancient iron often had carbon levels around 0.05% to 1%, especially when it was in contact with charcoal during manufacturing. That is conssitent with typical definitions of carbon steel (an iron-carbon alloy with about 0.05 to 2% carbon), so it may be appropriate to call such iron "steel"--especially if it has been carburized or otherwise treated to increase its strength. But iron or low-carbon steel rusts easily and is rarely preserved for archeologists to find. And for a long time, it was known but rare or precious, and thus unlikelt to be left lying around for easy discovery centuries later. This contributes to the many gaps in our understanding of metals in the ancient world. Nevertheless, there is enough evidence now of steel making before Laban's time that his ownership of a sword with a blade of "the most precious steel" should no longer be a sticking point for those exploring the Book of Mormon. In light of what we know now, it's a subtle statement of great plausibility--the kind of thing that now has to be discounted as just a lucky guess.
The reference to steel "smelted" from a hill by the very ancient Jaredites in the Book of Mormon is probably a reference to meteoric iron, which was known and prized by the Olemcs in the Americas. Meteoric iron is an alloy typically high in nickel content that some experts classify as "steel." Iron elsewhere in the Book of Mormon appears to be a precious metal whose knowledge presumably was brought to the Americas by the early Nephites but became a lost technology--something that happens far more frequently in history than you might think. We would be glad to encounter Mesoamerican finds of iron artificats someday, but since they were rare and since Mesoamerica has the kind of climate where precious ancient iron wouldn't last long, the chances of such a find cannot be high if, in fact, the Book of Mormon describes real people and real events on a small part of this continent.
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