I know my opinion won’t be shared by allot of people but lets face it this city is begging players to slaughter its inhabitants in constant massacre. As it stands unless you have a full blown refinery going you can’t match the quantity of steel which is able to be farmed. While this certainty helps get a early jump into higher tier weapons and armor it becomes a replenish-able source for clans and players who can safely ignore the traditional production methods. When new players ask the best source of Steel they are pointed to the North with the annotations of kill npcs.
So here is what I recommend either reduce the steel drops immensely. Of course you can make it more it line with lore and restricting the steel drops to chests, smelters, and blacksmiths. Finally you can remove steel drops from the npcs completely but keeping it as a rare chest item.
Instituting any of these would still allow enough still for repairs but encourage more trade among st peaceful groups and make steel a more precious committed to raid and remove from rival players and clans.