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Metal is a lot more general than Steel, so they probably just wanted to make it so more Pokemon made sense with it. When Steel was introduced, there were four Steel types -- Magnemite, Magneton, Forretress, and Steelix. Three of these have to do with steel specifically, thus the type was named Steel. Perhaps the developers thought that not all Steel Pokemon would have to relate to steel in the future (and instead just metals, hence the name), so they simply made the broader category of Metal. It is, of course, not possible to give a definite answer, so keep that in mind.

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It probably also has to do with Wizards of the Coast handling the card game back then and Metal energy starting as only available through Special energy. Special energy have names that differ from the actual typing, and Steel and Dark types started both as special energy only card types in Gen 2- which is why they are the only cards with energy names inconsistent with type names (Steel and Dark cards use Metal and Darkness energy, respectively). :P

Also, types in the TGC also often represent more than 1 type in game, so they may have considered using Steel Type cards for other types, most likely Ground, and they have changed typings around this Gen (I.e. Poison types as Dark cards and Fairies can be Psychic cards).
Given the direction a lot of Pokedex entries have gone, I'm inclined to believe that calling it Steel Type was a translation error.  Duraludon even specifically calls out that its body is comprised of a special alloy that rusts very easily.  Steel type being resistant to water overall is also kind of a tell, since different metals have different levels of resistance to rusting and other forms of corrosion.