The stack size for the Chest is currently set to 1000, but the default value should be 50. This seems to be a mistake, and it would be great if you could adjust it in the next update.

The stack size issue is actually with the Steel Chest, not the Iron Chest. I haven't tested the other chests yet, so I can't confirm if they have the same issue.

The stack size is updated for all chest types which are mergeable. This is not a bug, the game will complain if stack size isn't at least the area of largest mergable chest.