SteelThe 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.
These iron treasures are so valuable that it is possible they depict not wrought iron, but carburized iron. In the case of the grizzled, gray objects, it seems unlikely, for another type of iron appears in the Homeric texts: aithôn sidêros--the gleaming or shining iron more resembling flashing steel. Athena adopts the guise of a sailor trading copper for "gleaming iron" (Od. 1:182). In the Iliad, Telemonian Ajax cuts down Simoisius with shining iron (4:485). "Gleaming iron" is brought to a feast, along with bronze, cattle, and slaves (7:472). Finally, Hector vows to fight Achilles, even if Achilles’ rage be "burnished iron" (20:371). Aithôn sidêros has the appearance of steel and could be what is referred to by the formula "polukmêtos te sidêros" (hard wrought iron), since steel, while toilsome to produce, makes a far superior weapon than simple wrought iron. Archaeological evidence indicates that the advent of consistent, deliberate steeling of iron occurred by 1000 B.C.E., and that production of carburized iron objects increased rapidly after 900 B.C.E. (22). Thus it is likely that audiences hearing the Homeric poems at any time after the 9th C B.C.E. would be able to distinguish the three principal types of iron as well as, or better than, modern readers (23)....
Archaeological sites in the Mediterranean show evidence of centuries of experimentation with iron during the era of merging of the Homeric texts, resulting eventually in a "broadly based iron economy" (30) with highly skilled artisans. The high regard given to such artisans is implied in two Homeric scenes in which royal or divine metal workers bring the tools of ironworking to fashion precious metals (7). In Odyssey 3:432-435, Nestor’s goldsmith assembles hammer, anvil, and tongs to gild the horns of a sacrificial ox, when simply wrapping the horns with gold leaf would do. In Iliad 18:468-477, Hephaestus fashions Achilles’ arms and armor out of gold, bronze, and tin, using impressive but superfluous ironworking tools. If the association of ironworking with royal sacrifice and divine artistry is intentional, the honor given to ironworking in these passages is due to recognition of the exceedingly useful nature of steel, the wondrous technology of its production, or both. Certainly, the association of ironworking with religious ritual is not confined to the Homeric poems. The location of 10th C B.C.E. iron artifacts from Taanach, in Palestine, suggests that smithing or repair of iron objects had a sacred dimension (12), resulting perhaps from some mystical understanding of the metal or from the simple desire of those in power to control a lucrative product.
Indeed, the mystical and sacred aspects of iron working and steel, discussed by Ruth Russo in more detail in her article cited above, and its rare and precious nature in Nephi's day, are consistent with the sword of Laban being a sacred artifact and with the precious nature of iron in the Book of Mormon. It seems that this would not be something Joseph Smith would have derived from his environment in the 1800s.
Ancient iron often had carbon levels around 0.05% to 1%, especially when it was in contact with charcoal during manufacturing. That is consistent 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 unlikely 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.
Another excellent work on the history of iron and steel in ancient times comes from Cleyton Cramer in the essay, "What Caused The Iron Age?." He reviews the precious nature of iron during the Bronze Age and shows that it was used largely for precious ornamentation, including ceremonial tools and weapons, before the rise of the Iron Age, and later became more utilitarian while bronze still dominated. Here is one excerpt:
The development of steel, of course, made iron production essential. Indeed, 1200 BC is a commonly accepted date not only for the start of the Iron Age, but also for the discovery of carburization of iron. While the location of this discovery remains uncertain, it appears that in the Hittite kingdom, a blacksmith discovered how to make steel by heating iron in contact with carbon. But the production of steel was probably quite random at first. Throughout the eastern Mediterranean area in the first two centuries of the Iron Age, iron weapons appear alongside bronze weapons, with no evidence that iron provided any military advantage over bronze weapons.Cramer interprets evidence from archaeological finds to point to a copper shortage as the driving force that led to the iron age and the need for further development of steel as a metal equivalent or superior to bronze for utilitarian purposes. But there should be no question that carburized iron or steel, perhaps accidentally discovered, not well understood, and thus particularly valuable when it turned out well, was known in Laban's day and was used in precious artifacts such as ceremonial weapons.