A lecture given by Igor Abrikosov, at the Adventures in the Physical Metallurgy of Steels (APMS) conference held in Cambridge University. The emphasis is on how magentic properties play a role in the properties of iron. Ab initio simulations based on the Density Functional Theory (DFT) are known as a useful tool for prediction of materials properties and for their understanding. In this talk we review recent progress in applications of DFT for Fe-based alloys. We underline a necessity to take into account explicitly temperature induced magnetic excitations. We show that magnetic and chemical interaction in Fe-based alloys are deeply interconnected, and strongly affect each other. We start with relatively simple examples, and show that there exists very strong dependence of thermodynamic properties, like elastic constants, structural distortions, and mixing enthalpies, on the underlying magnetic state in Fe alloys with Cr, Mn, Ni, V, Nb, C, and N. We then show that effective chemical interactions in steels can be tuned by its global magnetic state, which opens exciting possibilities for materials synthesis. Using first-principles theory we demonstrate that in Fe-Si system the magnetic disorder at high temperatures favour a formation of cubic Fe2Si phase with B2 crystal structure, which is not present in the alloy phase diagram. The experiment confirms the theoretical predictions, and the B2 Fe2Si alloy is synthesized from Fe-Si mixture using multianvil press.