Diversity of mesostructures formed in steel at cooling from high temperature austenite (γ) phase is determined by interplay of shear reconstructions of crystal lattice and diffusion of carbon. Combining first-principle calculations with large-scale phase-field simulations we demonstrate a decisive role of magnetic degrees of freedom in the formation of energy relief along the Bain path of γ-α transformation and, thus, in this interplay. We show that there is the main factor, namely, magnetic state of iron and its evolution with temperature which controls the change in character of the transformation. Based on the computational results we propose a simple model which reproduces, in a good agreement with experiment, the most important curves of the phase transformation in Fe-C, namely, the lines relevant to a start of ferrite, bainite, and martensite transformations. Phase field simulations within the model describe qualitatively typical patterns at these transformations.

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