Materials Engineer

To begin with, you had better sit down for this. All elements on the periodic table are magnetic in one of 5 different ways and some require insane coercive fields for the effects to show up, but still, all things are magnetic. These 5 types of magnetism are ferromagnetism, ferrimagnetism, antiferromagnetism, paramagnetism, and diamagnetism with Ferromagnetism being by far the most common one referred to when 'magnetism' is used in a general nature.

For a quick refresher on magnetism you can go here:

http://bms.westport.k12.ct.us/lmc/mag.htm

Now, the carbon in steel does affect the lattice or crystaline nature as some have called it, so yes it will affect its behavior, but IT in and of itself is not what accounts for the magnetization. The balance, velocity, and direction of moving charges is what actually accounts for the overall magnetic effect.

Iron (Fe) being FerroMagnetic has probably the strongest overall effect, but like your momma's cookies, every recipe is a little different and thus reacts as a whole in its own way. A little more or less carbon will affect the mix, but only marginally since it is swamped by the ferromagnetic effect of the iron.

Material science in the fields of magnetics is a very complex one (above my head anyway) but once you understand the basics of the 5 types of magnetism and how their structure in the lattice plays a part in that, you will have a pretty good place to launch into a million new questions.

We need more materials scientists in magnetics, but it is a niche' field to say the least. It's a good question and I hope my answer is somewhat profitable.