Hi!
I have to admit that I merely responded to the later discussion not looking at the beginning. The change of the subject has made me aware of the greater issue.
I agree that there is a balance problem, but I don't think it is the difficulty of the steel industry itself.
The process itself is nice as it is. However this is not reflected in the trader prices. Truth be told, I think that all the nifty things are way too cheap. I mean, look at an iron anvil - 100 dwarf bucks. One quality level of wooden crafts fetched 10 dwarf bucks. This means, ten wooden ear rings made by a dwarf with NO experience whatsoever are worth as much as an iron anvil - or two of exceptional quality (I think). Thus, constantly having a single craftshop creating cheap items of wood, bone, horn, and stone can get you very, very far in dealing with the caravans.
Personally, I do very little digging for metals in general, as I am a trader/crafting type, but steel production using imported material is actually a goal as merchants with extra space will sometimes bring pig iron - and there is no other use for that.
So, besides the ready availability of the stuff surrounding HFS (at least as reported by others, I don't dig very deep), the cheapness of metal and ores in comparison to wood and bone is the main issue I see.
Deathworks