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The dramatic plunge in the Shanghai stock market took its toll on steel and iron ore prices this week.

By mid-week panicky sellers in the China domestic market had driven rebar, billet and hot rolled coil (HRC) prices off a cliff.

Confidence was also erased out of the iron ore market, and the Metal Bulletin spot index for 62% Fe material dropped $5.01 per tonne day-on-day to finish Wednesday July 8 at $44.59 per tonne cfr Qingdao.

The market turmoil left its mark on mining shares, and the fact that the Australian dollar fell to a six-year low was seen to bring only little relief to local producers.

While iron ore prices recovered and steel prices stabilised, market participants refused to see this as a sign for optimism, but dismissed the upward trend as a technical rebound only.

Come Friday July 10, iron ore spot prices recovered to around $50 per tonne cfr.

Spot rebar prices picked up, as buyers stocked up on materials amid a typhoon alert on the eastern coast while prices in the northern region rose in line with that of billet.

However, the China Iron & Steel Assn (Cisa) expects Chinese steel prices to drop even further over the rest of July on oversupply pressures, seasonally weak demand and the slowdown in the Chinese economy.

The decline in iron ore spot prices means that junior miners find themselves under a lot of pressure again and production cuts are expected to be announced in coming months.

As the brakes tighten more on the Chinese economy, the prospect of yet more steel product exports is looming, as domestic steelmakers seek outlets for their material.

The billet market is a case-in-point.

Billet exports from China have once again become a hot topic globally, and Steel First’s editorial teams around the world have asked market participants about the effects the rising exports have on trade flow in their regions.

Automotive sector
Further downstream, in the automotive sector, Brazil, Russia and China stood out with more negative headlines.

Car output in Brazil fell by 14.8% year-on-year in June to 184,000 units, according to figures released by the country’s automobile association, Anfavea.

In the first half of the year, Brazil’s car output dropped by 18.5% year-on-year.

The Assn of European Businesses (AEB) has slashed its 2015 forecast for new car and light commercial vehicle (LCV) sales in Russia.

The association now expects a 36% drop in sales volumes for the year, amounting to 1.55 million cars and LCVs.

China’s vehicle market also remained in a downward trend in June, with production and sales of passenger cars falling for the first time on both a yearly and monthly basis since December 2008.

In contrast, Turkey registered a 51% year-on-year increase in auto sales in June.

Mexico’sauto production grew by 6.7% year-on-year in June, according to figures released by the country’s car association, Amia.

Car production in Argentinarose by 6.3% year-on-year in June, according to figures released by the country’s auto association, Adefa.

Around the world

The Brazilian steel industry, which already faces many different challenges, is seeing added pressure from a money-laundering probe which is leading to a slowdown in project investments.

We will be reporting from the 26th Brazilian Steel Congress, starting on Sunday July 12.

The country’s steel association, IABr, is expected to publish yet another downward revision of apparent steel consumption in the country at the event.

In the latest Steel First interview, Kaizer Nyatsumba, ceo of the Steel & Engineering Industries Federation of Southern Africa (SEIFSA), talks about the need of South Africa’s steel industry for political leadership and collaborative efforts in order to progress.

And finally, we examined why demand for steel products for energy projects in the North Sea has been less affected by globally depressed oil prices than inother regions.

New price assessments
We launched a weekly Chinese metallurgical coke export price assessment this week.

Steel First assessed non-blended cargoes of coke with 65% coke strength after reaction (CSR), 12.5% ash and a physical size of 30-90mm at $153-155 per tonnefob Tianjin on Tuesday July 7.

We also added a weekly Egyptimport billet price assessment to our portfolio.

The market is expected to revive in the second half of July, after Ramadan ends.

The price assessment stood at $360-365 per tonne cfr Egypt on Thursday July 9, down by $15 per tonne week-on-week.