-iron by weight is 0.05%, whereas the solubility in
γ-iron is 2.0%. The phase diagram for the iron-rich end of the iron-carbon system is shown in Fig. 1.
Although the maximum solubility of carbon in solid solutions in 2.0%, carbon is even more soluble in liquid iron. The range of compositions from 2% to 4.5% carbon gives rise to the very important group of engineering materials called cast irons.
Cast Iron
Cast irons have comparatively low melting points and are very fluid in the molten state. For these reasons, such alloys can be cast directly into moulds to form complicated shapes which require little machining to make them suitable for use in engineering structures. However, because of the variety of structures it is possible to produce during solidification and heat treatments, a remarkably wide range of property combinations is possible.
As cast irons solidify, any carbon in excess of 2% comes out of solution as graphite and a compound of iron and carbon of composition Fe3C known as cementite. The brittle, needle-like crystals of cementite, as well as the flakes of graphite, weaken the structure in which they are held. For this reason, cast irons are usually brittle. However, with appropriate alloying agents, such as cerium or magnesium, the graphite can be made to precipitate in a spheroidal form that affects the strength and ductility to only a minor degree. If required, the formation of graphite can be suppressed in favor of cementite, making the material harder and more wear-resistant. Cast irons can be even further modified by heat-treatment to produce castings which are as strong and tough as many steels (i.e., the malleable cast irons).
There are so many variations of composition and treatment that a full description of cast irons is beyond the scope of this text, but they have been and will continue to be valuable engineering materials.

Fig. 1: Phase diagram of the iron-rich end of the iron-carbon system. Note that carbon can separate as graphite or as a carbide of iron, Fe3C, depending on the rate of cooling [1]
Steels
Let us turn our attention now to iron-carbon alloys that contain less than 2% carbon, alloys that form the basis of another group of materials of fundamental engineering importance-the steels.
If we examine the boundary of the γ-solid solution in the phase diagram for iron-carbon alloys in Fig. 2.18, we can see that the boundary falls from 910C for pure iron to 723C for an alloy containing 0.8% carbon, and then rises to 1130C for an alloy containing 2% carbon.
What this means is that when an iron-carbon alloy containing more than 0.8% carbon cools to the
γ boundary line, Fe3C precipitates at such a rate that at 723C, just 0.8% carbon remains in solid solution in
γ iron (austenite). When an iron-carbon alloy containing less than 0.8%
carbon cools to the γ iron boundary line, a-iron (ferrite) begins to separate first. Carbon is much less soluble in ferrite, so the carbon will build up in the remaining austenite at such a rate that at 723C, the 0.8% solution of carbon in austenite is again achieved.
At 723C, austenite containing 0.8% carbon always decomposes under equilibrium conditions in the same way to produce ari intimate mixture of ferrite and cementite known as pearlite, on account of its* irridescent appearance under the optical microscope (Fig. 2). The amount of pearlite increases from zero at very low carbon contents up to 100% if the steel contained 0.8% carbon to start with. Thereafter, it falls as the carbon content goes up to 2% because the excess carbon forms Fe3C alone. Up to 0.8% carbon, the hardness and strength rise and ductility fails in almost direct proportion to the amount of pearlite.

Fig. 2: Microstructure of pearlite - the intimate mechanical mixture of ferrite and Fe3C formed at 0.8% carbon on slow cooling from austenite [1]
Reference:
[1] W.O. Alexander, G.J. Davies, K.A. Reynolds and E.J. Bradbury: Essential metallurgy for engineers, p61-63. Van Nostrand Reinhold (UK) Co. Ltd. 1985. ISBN: 0-442-30624-5