While the ferrite allotrope of iron, which is normally what we see as wrought iron will not absorb much carbon, when heated to a higher temperature, it becomes austenite? which is then capable of combining with carbon to form steel. Additional metals are usually added to carbon steel to change its charatistics. Nickel in steel adds to the tensle strength, Chromium increases the hardness, Vanadium also increases the hardness, while reducing the effects of metal fatigue.
After the heating process, the cooling of the steel must be controlled in order to control the crystal form of the steel. This is known as quenching. The steel must be cooled quickly in order to achieve the desired crystal form, but cooling too quickly will cause the metal to crack. Water cools the steel too quickly, and thus oil is traditionally used.
There is also stainless steel, which does not rust, and isn't magnetic. It is an alloy of iron with chromium and vanadium.