When we put a piece of steel in water then it sinks because steel is denser than water whereas ship is not a block of iron and steel a ship is a hollow object made of iron and steel which contains a lot of air in it air has a very low density due to the presence of a lot of air in it the average density of the ship becomes less than the density of water and since the average density of ship is less than that of water therefore a ship floats in water thus a ship made of iron and steel floats in water because its average density is less than that of water due to the presence of a lot of air space in it.