Steel loses its magnetic properties at temperatures below its melting point, specifically at the Curie temperature, which is around 800 Celsius for iron. The exact temperature can vary for steel depending on its carbon content. The discussion highlights the challenge of using rare Earth magnets during welding, as the steel will lose its magnetic properties at the Curie temperature. Additionally, while welding generates a current that produces a magnetic field, it is uncertain if this field is sufficient to affect the welding process. Understanding these temperature thresholds is crucial for applications involving welding and magnetism in steel.