Very unusual to say this. In 99% you will say Stahl ist kein chemisches Element. Its grammatical, but it sounds extremly unusual for me.

You could create similar constructions, that are less rare. One example: Stahl ist nicht das Element, welches wir suchen.

Grammatically it works, idiomatically I'd expect a second (subordinate) clause à la ..., sondern eine Legierung.

I'd like to hear from a native speaker about the answer. It would seem ok to me, but grammar is not my forte.