A Steel key is an item that players can steal from H.A.M. Guards in the store rooms (lower level) of the H.A.M. Hideout.
It is used to open the small chest in the south-east store room and also the two chests in the meeting room, north of the four rooms. To enter the room, the player needs to pick the lock on the door while the guard is facing away. If the guard sees the player picking the lock, the guard will attack them.
Possible rewards include an emerald amulet and a sapphire necklace.
After using the key to unlock the chest, the player receives a message in the chatbox saying: "Your steel key breaks in the lock." and the key disappears from the inventory.
- Please note: All of the H.A.M. keys (bronze, iron, steel and silver) can be obtained at the lowest level of the H.A.M. Hideout by pickpocketing the H.A.M. Guards. Rewards from the chests include: coins (small amount), 1-5 pieces of random jewellery (ranging from sapphire to diamond,) and/or cut gems (also ranging from sapphire to diamond.)
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For an exhaustive list of all known sources for this item, see here