Normal transmission has resumed in the iron ore market – well, sort of. After Wednesday night's panicked 10 per cent fall in the iron ore price, Thursday evening saw the spot price in Chine shoot up 10 per cent to $US48.99 a tonne.

It wasn't much of a surprise – the brutal sell off always felt like a panicked overreaction, and after the Shanghai market soared on Thursday a similar jump in iron ore was always on the cards.

Atlas Iron boss David Flanagan, who finds himself in the middle of investor roadshow trying to raise $180 million to rescue his beleaguered third tier miner, was spot on when he declared volatility was the new normal.

Now he, and the rest of us, can get back to worrying about the fundamentals of the market.

And there's still a bit to worry about. Flanagan's breakeven price right not us $US53 a tonne, so he and plenty of others in the sector are under water.

While BHP Billiton and Rio Tinto are unwavering in their belief that Chinese steel demand will eventually hit 1 billion tonnes a year – probably around 2025 – there are clear signs that the steel sector in China is currently in retreat.

Li Xinchuang, president of the China Metallurgical Industry Planning Association, told The Australian Financial Review that weak demand from property and infrastructure construction would shrink steel output 2 per cent.

That might not sound like a big fall, but when the supply of iron ore keeps rising, the pressure on prices will continue to build.

Investment bank Citi believes iron ore prices will fall to $US42 a tonne in the third quarter of 2015 and then drop to $US38 a tonne in the final quarter of the calendar year as the wall of supply keeps building – including from Gina Rinehart's new mine, Roy Hill.

Looking further out to 2016, things don't get much better, with Citi predicting the price could dip as low as $US37 a tonne in the third quarter of 2016 as the ore keeps flowing .

Total global seaborne exports are tipped to rise from 1,447 million tonnes in 2015 to 1,534. When steel demand is stagnant best and falling slightly at worst, those numbers look more than believable.

Those prices would ensure the second and third tier miners – including Fortescue in the former category and the likes of Atlas, BC Iron and Arrium in the latter – remain under intense pressure.

Their two great hopes will be driving further reductions in operational costs and a falling Australian dollar.

Pulling out ore mining costs is possible, but it won't be easy. The best hope for the smaller miners is probably to lean more heavily on their beleaguered contractors. How much this group still has to give is questionable.

A lower Australian dollar would really help take some of the sting out of any further (rational) price falls. The miners would have been relieved to see the Aussie dip under US74¢ during the week, but will that trend continue?

Unfortunately, a lower iron ore price looks a safer bet than a lower Aussie dollar.