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steel (an alloy of iron with small amounts of carbon; widely used in construction; mechanical properties can be varied over a wide range)

iron--Fe, atomic number 26 (a heavy ductile magnetic metallic element; is silver-white in pure form but readily rusts; used in construction and tools and armament; plays a role in the transport of oxygen by the blood)

The primary difference between steel and iron is that iron is an element and steel is an alloy. To make steel, all you have to do is add carbon.........through a complex process.

Source: http://wordnet.princeton.edu