Think about your answer, then reveal below.
Model answer: A steel ship is hollow and filled with air, which gives it a very large volume compared to its mass. The overall density of the ship (steel plus the air inside) is less than the density of water, so it floats. A solid chunk of steel would sink because it is denser than water.
Density is mass divided by TOTAL volume. A ship is mostly air inside its steel shell. Even though the steel itself is dense, the enormous volume of air brings the average density of the whole ship below water's density. If the ship fills with water (loses that air space), it sinks — as the Titanic demonstrated.