The section of the Wikipedia entry on "Steel" about its early history is very informative:
Ancient steelSteel was known in antiquity, and may have been produced by managing bloomeries, or iron-smelting facilities, in which the bloom contained carbon.
The earliest known production of steel is a piece of ironware excavated from an archaeological site in Anatolia (Kaman-Kalehoyuk) and is about 4,000 years old. Other ancient steel comes from East Africa, dating back to 1400 BC. In the 4th century BC steel weapons like the Falcata were produced in the Iberian Peninsula, while Noric steel was used by the Roman military.
Steel was produced in large quantities in Sparta around 650BC.
The Chinese of the Warring States (403–221 BC) had quench-hardened steel, while Chinese of the Han Dynasty (202 BC – 220 AD) created steel by melting together wrought iron with cast iron, gaining an ultimate product of a carbon-intermediate steel by the 1st century AD. The Haya people of East Africa invented a type of furnace they used to make carbon steel at 1,802 °C (3,276 °F) nearly 2,000 years ago.
Wootz steel and Damascus steelEvidence of the earliest production of high carbon steel in the Indian Subcontinent was found in Samanalawewa area in Sri Lanka. Wootz steel was produced in India by about 300 BC.
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However, the steel was an old technology in India when King Porus presented a Steel sword to the Emperor Alexander in 326 BC. The steel technology obviously existed before 326 BC as steel was being exported to the Arab World at that time. Since the technology was acquired from the Tamilians from South India, the origin of steel technology in India can be conservatively[vague] estimated at 400-500 BC.
Along with their original methods of forging steel, the Chinese had also adopted the production methods of creating Wootz steel, an idea imported into China from India by the 5th century AD. In Sri Lanka, this early steel-making method employed a unique wind furnace, driven by the monsoon winds, capable of producing high-carbon steel.
Also known as Damascus steel, wootz is famous for its durability and ability to hold an edge. It was originally created from a number of different materials including various trace elements. It was essentially a complicated alloy with iron as its main component. Recent studies have suggested that carbon nanotubes were included in its structure, which might explain some of its legendary qualities, though given the technology available at that time, they were produced by chance rather than by design. Natural wind was used where the soil containing iron was heated by the use of wood. The ancient Sinhalese managed to extract a ton of steel for every 2 tons of soil, a remarkable feat at the time. One such furnace was found in Samanalawewa and archaeologists were able to produce steel as the ancients did.
Crucible steel, formed by slowly heating and cooling pure iron and carbon (typically in the form of charcoal) in a crucible, was produced in Merv by the 9th to 10th century AD. In the 11th century, there is evidence of the production of steel in Song China using two techniques: a "berganesque" method that produced inferior, inhomogeneous steel and a precursor to the modern Bessemer process that used partial decarbonization via repeated forging under a cold blast.
From BBC News Online
14 January 2014 Last updated at 19:45 ET
East Lothian's Broxmouth fort reveals edge of steel
Archaeologists have identified the earliest use of steel in the British Isles from a site in East Lothian.
They now believe artifacts recovered from the site of the Broxmouth Iron Age hill fort were made from high-carbon steel.
This would have been deliberately heated and quenched in water, indicating "sophisticated blacksmithing skills".
The steel objects were manufactured in the years 490-375BC.
Because of their condition, it has not been possible to say definitively if the objects were tools, weapons, or served some other purpose.
The Broxmouth site was in use from the Iron Age until the period of Roman occupation, nearly 1,000 years later.
The near-total excavation of the area in the 1970s means it is almost entirely gone, with a cement works in its place.
The new research was carried out on objects recovered at that time.
Well-preserved roundhouses, elaborate hill fort entrances and an exceptionally rare Iron Age cemetery were among the discoveries made at the site.
A generation of Scottish archaeologists learned their trade at Broxmouth, which became one of the most comprehensive excavations of any Iron Age hill fort in Britain.
In 2008, a new project was set up at the University of Bradford to write up the findings of the excavation.
It has now been published by the Society of Antiquaries of Scotland.
Dr Gerry McDonnell, an expert in archaeological metals and a specialist involved in the project, said: "The process of manufacturing steel requires extensive knowledge, skill and craftsmanship.
"It is far from straightforward, which is why such an early example of its production tells us so much about the people who once occupied this hill fort.
"It points to an advanced, organised community where complex skills were refined and passed on."
Cabinet Secretary for Culture Fiona Hyslop said: "Broxmouth has a special place in the history of Scottish archaeology, and of the many interesting discoveries to come out of it, evidence of the earliest use of steel in Britain is particularly exciting.
"The manufacture of steel is a complex and skilled process."