Absolutely safe for steel. Some C&V aficionados feel that powder coating negatively affects the lines of the lugs on lugged bikes. I have two steel frames/forks that I had powder coated. One is a two stage that cost $180 and one is a single stage with a cost of $100. One is lugged and one is, I believe, tig welded. The picture is of my late 80's Ochsner lugged steel.

Late 80's lugged Ochsner.