Iron comes in two basic forms: ferrit and austenit. Ferrit is magnetic, austenit isn´t. When you heat iron above a certain temperature it becomes austenit (when you make a nail red hot it´ll lose it´s magnetic properties as long as it stays hot). Due to the alloy metals low carbon stainless steel stays austenitic at room temperature therefore it´s not magnetic. As a side effect it can´t be hardend by heat treatment.
Hope that helps.

terrier,

The newer canteen cups should be aluminum. They have been that way for a while (at least 8 years) as they are lighter than stainless steel, but I have been known to be wrong

As far as the letters in the middle, they are lot numbers. The numbers may be a year or what ever, and the letters are the manufacturer and the lot designation. I looked at mine and I gave: US PAC FAB. I am sure that is the Manufacturer. Not all US military gear is made by one company as you know, so each company gets to stamp their info into the cup. To tell you the truth, I rarely use mine at all in the field. I keep it in my canteen pouch to keep it open when I pull out my canteen and put it back in.

Garrett

When it can be steel or aluminium, you could judge using the density. When the cups have approximately the same size and weight, the aluminium one has to have walls that are three times as thick as the walls of the steel one. That should be easy to determine.