The idea is that the "Iron Scraps" are "Rusty" Therefore the idea is that you are suppose to "Clean them" With a Fission Washing Machine, Which would be like a dying vat / Crafting station, for each 5 Iron Scraps = 1 Steel Scrap. This can lead to new weapons, new buildables and new stuff in general.

This "Fission Washing Machine" is built with 2 Fission Cores, 4 Inductance Coils, Structural Beams (10) and Tape Bundle (5).

1. Why is it so expensive? 1a. More work and effort, and it give a sense of achievement when you get to the next tier of buildables.
2. What buildables come after Steel Scraps? 2a. Silicon then Rubite. 5 of each resource then the Steel Buildable.