why is steel used to make permanent magnets?

Re-design7 years ago
For a really killer answer that includes all of the facts google magnets or got to wiki and look at magnets.
In answer to your other question aswell, about iron being used as a temporary magnet:

Steel is hard to magnetize but stays magnetized much better than iron, it's all down to the properties changed by the carbon content of steel and iron, the same way they have differing properties in strength and flexibility.

Iron is very easy to magnetize temporarily but is easily demagnetized over time or with a sharp tap.