Steel is often used in forms of weaponry.
Especially in projectile weaponry.
Like metal arrows, bullets, slingshot pellets, or...
Where would you expect to find a cannonball?
In a cannon, perhaps?
There's a cannon somewhere on Monkey Island.
Forts usually have cannons.
Where can I find a fort?
There's a cannon inside the fort.
And a cannonball's inside the cannon.
But you can't just reach into the cannon.
Push the cannon to spill out a cannonball.
Pick up the cannonball. (If Herman Toothrot's inside, you may have to leave the Fort and re-enter.)