If I remember correctly involving elves, what matters is how much wood you have stockpiled during their arrival. You could chop down trees like mad, but as long as it's all used up by the time they get there, they won't care.
And honestly, I've -rarely- had this become a problem. In my entire time of playing DF, I've been warned about it a couple times by elves, but they've never done anything. The only time I've ever been attacked by elves is when their caravans got attacked by ambushers and killed. They apparently blame me for the fact that they walk around with no protection and come to trade their silly little crap with me and expect me to keep them safe.
Regardless.. Not having a lot of first hand experience (as I've never pushed them hard enough to start a war.. I really should, but their new ability to trade foreign/rare creatures is intriguing, and has delayed their death), I'm pretty sure all elves wear wooden armor and wooden weapons. So.. They should be a slaughterfest. I'm not sure if they bring creatures with them to fight now, but even then I doubt they'd give steel dwarves much trouble. Bows might be an issue, but even then..eh.. wooden arrows..
Like I said though, it's what's in your stockpile that counts, and they'll warn you if they're upset.
Also, there's special fun stuff you find eventually that makes lignite/coal much less necessary... Still a couple necessary for steel, but...