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American Steele takes charge in LIV Adelaide as major champions loom
The American nailed nine birdies to one bogey in an eight-under-par 64 at the Grange Golf Club to edge clear of New Zealander Danny Lee, who carded a 67.
Mexico's Carlos Ortiz and Chile's Mito Pereira were a shot further back.
"I was hitting it really well today," said Steele, who is 14-under after 36 holes and looking to better his best result on the Saudi-backed tour -- third place in Tuscon last year.
"There's a lot of birdies out there and it's kind of going to be a race to 20-under I think," he added of the potential winning total.