Mining giant Rio Tinto has been added to the most preferred list of US Bank of America Merrill Lynch.

The US broker said that the shares already assume an iron ore price similar to the 2012 low of well under USD 100 per tonne even though it is currently USD 121. The broker does not rule out a price slide during the seasonally weaker second half this year but a lot of this is already discounted in the price.

According to BoA, China steel mills appear to have destocked iron faster this year than last perhaps influenced by tighter credit conditions. Industry estimates suggest iron ore days inventories at steel mills are around 24 days compared to 32 this time a year ago, which could drive a near term re stock.