There are 2 ways of obtaining steel, the easy way and the hard way.

The easy way requires a steel furnace or better, so before you have that, you need to do it the hard way.

When you first make steel, first find granite, and make a crucible; you need to mix iron and coal in a crucible, this makes a steel nugget, put 3 together to make steel. This is expensive and slow. making steel a valuable material

To properly utilise steel for your tools. you should aim on making a steel furnace, when one of these are up, you can mass produce steel easier

Steel is a valuable and versitile metal. it is far superior to iron in many ways. and can be used to create encrusted tools.