Question

why does a piece of iron sink while a ship of iron floats in water

Answer 1

So the average density of the ship as a whole is less than the density of water. Therefore immersed portion of theship displaces water equal to its weight. So the ship floats whereas a sheet of iron is compact and there are no air spaces inside it. ... Hence the ship does notsink

Answer 2

Iron needles will sink in water because they are more dense than the water. To achieve the above takes advantage of the force exerted by water tension.
An iron ship (or any metal ship as is the modern standard) floats because it is shaped such that it will contain air within its hull and therefore the average density of the ship as a whole including cavities and all the air space is less than the water and therefore it floats. The force that causes it to float is called buoyancy and its magnitude, as defined by the Archimedes Principle, is equal to the weight of the water displaced by the object.