Very early days for steam but actually happening now, which is progress. Still several months away probably.
More like years. I wouldn't expect any steam locos before Q4 2022. But at least they are planning to work on them now...
Its not like DTG can pull a steam loco out of their you know what out of the blue, these things take time, and time to do it right, steam is already confirmed for TSW2, you just have to keep your eyes on the roadmaps and the live articles for more updates on them.
Updating to the UE4 probably won't happen till "TSW3" (or whatever it'll be called) in August/September. The plan could be to release a steam route/loco as part of the new base game or if not probably not getting a steam loco till a month or so later around October/November. That's what I reckon anyway. Any sooner then obviously that would be great!
But I'd be happy to wait longer. When they do steam, they have to do is well and not rush it. We all want a nice game, not a cra*py one. So I hope they take all the time they need to present something nice
The last I heard, they were still talking about how they were going to do it, so unless models are being built in the meantime, it could be a long while yet.
Personal estimation from me would be Q1 2022, since there is a heck more to do compared to our electric and diesel locos, physics, gameplay, ui, modeling and what not. If they couple the first loco with a route they better start that soon enough as well, considering it takes them about 6+ months to do a route.