I've had a number of people complain about the steel sword that Laban had in 600 B.C., allegedly long before steel would be invented. It's a topic I address in my LDSFAQ page on metals and the Book of Mormon. In exploring this topic, I found one more interesting tidbit in a scholarly book on ancient iron and steel.

At Google Books, you can preview Iron and Steel in Ancient Times by Vagn Fabritius Buchwald (Volume 29 of Historisk-filosofiske Skrifter, Det Kongelige Danske Videnskabernes Selskab, Copenhagen, Denmark, 2005) to find interesting information on ancient steel. For example, on page 72, I found this:

Thus, the ancient book, The Odyssey, apparently refers to steel manufacturing that was known in the Mediterranean region well before the time of Lehi. Hardened steel was not common, though, and was used for only a few objects, including an occasional sword. A steel sword in Jerusalem in Nephi's day may indeed have been rare, but known, and thus it is entirely plausible for the Book of Mormon to mention a sword of a significant and wealthy military leader that was made of "the most precious steel" (1 Nephi 4:9). Not the whole sword, but the blade, where hard steel would be especially desirable.

I also recently read "The Heart of Steel: A Metallurgical Interpretation of Iron In Homer" (PDF file) by Ruth Russo of Whitman College. She gets into the details of the different forms of ironand apparently steel mentioned by Homer. This is a beautifully written scholarly examination of some intriguing details in Homer that illustrates the importance of steel in the ancient world, and points to the plausibility of a precious steel sword in Laban's day. Read the whole thing, please, but here is an interesting excerpt:

The ancients in Nephi's day had the ability to carburize iron, but that does not mean that iron or steel was commonly available. The steel of Laban's sword was "most precious," clearly not a commodity item. In fact, subsequent appearances of iron in the Book of Mormon rate it with precious metals and riches rather than treating it as an ordinary material, as if metallurgical skills were largely lost in Nephite culture sometime after Nephi's era.

Indeed, the mystical and sacred aspects of iron working and steel, discussed by Ruth Russo in more detail in her article cited above, and its rare and precious nature in Nephi's day, are consistent with the sword of Laban being a sacred artifact and with the precious nature of iron in the Book of Mormon. It seems that this would not be something Joseph Smith would have derived from his environment in the 1800s.

Another excellent work on the history of iron and steel in ancient times comes from Cleyton Cramer in the essay, "What Caused The Iron Age?." He reviews the precious nature of iron during the Bronze Age and shows that it was used largely for precious ornamentation, including ceremonial tools and weapons, before the rise of the Iron Age, and later became more utilitarian while bronze still dominated. Here is one excerpt:

Cramer interprets evidence from archaeological finds to point to a copper shortage as the driving force that led to the iron age and the need for further development of steel as a metal equivalent or superior to bronze for utilitarian purposes. But there should be no question that carburized iron or steel, perhaps accidentally discovered, not well understood, and thus particularly valuable when it turned out well, was known in Laban's day and was used in precious artifacts such as ceremonial weapons.

Incidentally, a photo of a gold-hilted sword with a blade made of meteoric iron is available in Volume 3 of the Encyclopedia of Mormonism under the article, "Sword of Laban." The sword comes from the tomb of Tutankhamun, who died in 1325 B.C., over 700 years before Nephi saw the sword of Laban. For more information on the ancient use of iron and steel prior to Nephi's time, see Oleg D. Sherby and Jeffrey Wadsworth, "Damascus Steels," Scientific American 252 (February 1985): 112-20; J. P. Lepre, The Egyptian Pyramids: A Comprehensive Illustrated Reference (Jefferson, NC: McFarland, 1990), 245; Immanuel Velikovsky, Ramses II and His Time (Garden City, NY: Doubleday, 1978), 222-37.

Another useful paper on ancient steel is "Steel in Ancient Greece and Rome" by E.A. Ginzel, 1995. Ginzel argues that early forms of steel were known and made by the ancients, though not well understood.

While most ancient works of iron or steel are not likely to survive because of corrosion, one recent well-preserved find of an ancient iron sword from the Middle East is reported by Avraham Eitan, "BAR Interviews Avraham Eitan: Antiquities Director Confronts Problems and Controversies," interview by Hershel Shanks, Biblical Archaeology Review 12/4 (1986): 30-38, as discussed in the new book, Pressing Forward with the Book of Mormon, edited by John W. Welch and Melvin J. Thorne, Provo, Utah: FARMS, 1999. A large iron sword, three feet long and about three inches wide was excavated at Vered Jericho (a place near Jericho in Israel). It has a bronze haft with a wooden grip. The strata from which the sword was excavated dates to the late seventh century BC. This sword is unlike the shorter daggers that are normally depicted in art from this part of the world. It provides evidence that iron (steel?) swords of large size were known in Nephi's day. (See also William J. Adams Jr., Journal of Book of Mormon Studies, Vol. 2, No. 2, 1993, pp. 194-195.)
Ancient iron often had carbon levels around 0.05% to 1%, especially when it was in contact with charcoal during manufacturing. That is consistent with typical definitions of carbon steel (an iron-carbon alloy with about 0.05 to 2% carbon), so it may be appropriate to call such iron "steel"--especially if it has been carburized or otherwise treated to increase its strength. But iron or low-carbon steel rusts easily and is rarely preserved for archeologists to find. And for a long time, it was known but rare or precious, and thus unlikely to be left lying around for easy discovery centuries later. This contributes to the many gaps in our understanding of metals in the ancient world. Nevertheless, there is enough evidence now of steel making before Laban's time that his ownership of a sword with a blade of "the most precious steel" should no longer be a sticking point for those exploring the Book of Mormon. In light of what we know now, it's a subtle statement of great plausibility--the kind of thing that now has to be discounted as just a lucky guess.

The reference to steel "smelted" from a hill by the very ancient Jaredites in the Book of Mormon is probably a reference to meteoric iron, which was known and prized by the Olmecs in the Americas. Meteoric iron is an alloy typically high in nickel content that some experts classify as "steel." Iron elsewhere in the Book of Mormon appears to be a precious metal whose knowledge presumably was brought to the Americas by the early Nephites but became a lost technology--something that happens far more frequently in history than you might think. We would be glad to encounter Mesoamerican finds of iron artifacts someday, but since they were rare and since Mesoamerica has the kind of climate where precious ancient iron wouldn't last long, the chances of such a find cannot be high if, in fact, the Book of Mormon describes real people and real events on a small part of this continent.

Regarding the possibility that meteoric iron alloys could be properly called steel, Robert J. Forbes in Metallurgy in Antiquity: A Notebook for Archaeologists and Technologists (Leiden: E.J. Brill, 1950, p. 402, as cited by John L. Sorenson, "A New Evaluation of the Smithsonian Institution 'Statement Regarding the Book of Mormon,'" FARMS Paper SOR-93, Provo, Utah: Foundation for Ancient Research and Mormon Studies, 1993, p. 17) lists it as "a type of steel" and its presence in Mesoamerica is well known (3 references given by Sorenson, 1993, p. 18). I verified this at the Georgia Tech library, where I found the Handbook of Iron Meteorites(2 vols.) by Dr. Vagn F. Buchwald, University of California Press, Berkeley, 1975. Nickel-iron alloys appear very common in meteorites. Further, I found several examples of meteoric metals that the author compared to man-made steel listed in Volume 2, including haxonite from Canyon Diablo in Arizona (p. 393), a face-centered cubic carbide related to tool steels and stainless steels; kamacite from Tucson, with similarities to hypo-eutectoid steels (p. 1243); and metal from the Kamkas mass (South Africa, I believe) whose structure "is reminiscent of commercial ferritic stainless steel" (p. 1387).

A mechanical engineering dictionary offers this information on "nickel steel":

The point is that at least some meteoric metals can be called steel with technical accuracy, and could certainly be called steel by ancient peoples or modern translators, who might easily call a broad range of iron alloys "steel." Though speculative, I suggest that it may be one of several reasons not to abandon the Book of Mormon over apparent problems involving mentions of metals in Book of Mormon times.