(Edit) While the first post is still relevant, I recommend scrolling down to reply #8.
I hadn't really paid attention to it, as I saw a semi-official reply that bronze being better weapons/armor quality metal than iron was WAD, but looking through the raws it seems that the iron in the game is just that. Iron. Pure Iron. 100% iron with no carbon or residual metals.
While I must say that I'm not any kind of expert in metallurgy, skimming through wiki articles and some engineering related sites I found, it seems that while wrought iron is generally purer than the lowish carbon steel they used in middle ages, it could also have nearly the same material composition. The main difference, even if the materials were the same, seems to be that the impurities that make steel strong were concentrated in few spots in wrought iron, hence erratic properities.
What I find to be the problem here is that while Dwarves have little trouble spitting out loads of steel, Humans and especially Goblins have to do with something that is really sub par. Though it is partly the cause of penetration calculations not having enough variance and not enough damage being carried through the armor, you can quite easily find out with simple testing that steel utterly overpowers the current iron. Steel goes through iron every time and, according to testing carried out by Zagibu, steel deflects iron more than 90% of the time (this figure is for spears and swords atm).
Now, unrefined wrought iron is hardly the most ideal metal for arms and armor, we do have historical accounts of Celts having to streighten out their bent blades after heavy blows, but if DF is supposed to be set in around 14th-15th century thematically then Humans and Goblins only having access to
pure iron is rather wierd, and I also feel it is unfair. Iron working cultures in that time period seem to have generally had know to how to make at least something akin to steel, or would have used wrought iron, which is as I pointed out, an iron alloy (but weaker than steel and again, erratic, hence the Polybius Celt reference). Oh and btw,
if Gobbos use lots of steel in this version and I just haven't noticed it, now is the time to club me on the head.
So, based on the assumption that we want to retain a monopoly in manufacture of unobtainium űbermetal for dwarves I see two major ways of making iron less sucky.
First would be to give iron a great variance in performance from item quality. I don't know if quality for weapons does anything besides modifying monetary value in this version (ie. 0.31.03) but not matter if it does or doesn't, iron could be given a special scale that would make regular quality iron items worse than bronze of the same quality, about equal with bronze around superior quality and mastercrafts and artifacts near equal with steel mastercrafts and artifacts. For weapon and armour functions mainly.
This would abstractly represent skilled craftsmen/goblins/dwarves using techniques like forge welding to further improve what they have on hand (accurate forge welding would produce something akin to steel, by using the same materials dwarves in the game use for steel). Material properities of iron would need to be improved a bit overall, to make it bit more like wrought iron.
The second way would be actually creating a second type of steel, possibly a one that uses simpler reaction (so that it could serve dwarves as short term alternative on fluxless maps). Possibly, the common steel, the one that would replace current iron as standard material, could be based on low carbon steel, while the dwarf made steel could be based on mid carbon one. In real world though, the fact that mid carbon steel is harder and hence tends to break under stress easier, rather than bend, would have some possible negative effects even if it would otherwise penetrate better and resist better.
Possible naming conventions for the new metals (or alloys) could be soft iron, iron and steel (more intuitive, really) or iron, steel and some fresh name from the facinating dwarf language (ezarkel, ezarkelite or soldier-metal has a nice ring to it I think).
For comparison and possible reference, here are some tables for the steels I found, first low carbon, then medium:
http://www.matweb.com/search/DataSheet.aspx?MatGUID=034970339dd14349a8297d2c83134649http://www.matweb.com/search/DataSheet.aspx?MatGUID=098700ed63b24b14bd3bfdbec937489f