Investment Rating - The report does not explicitly state an overall investment rating for the aluminium premiums industry, but it suggests hedging strategies for European consumers due to limited downside risks [3][13]. Core Insights - The report introduces a framework for determining the fair value of aluminium premiums, which helps identify inefficient pricing across physical markets and gauge market tightness [5][6]. - Current premiums in the US are close to fair value, but there are downside risks due to a forecasted decline in LME prices and potential tariff exclusions [3][11]. - European premiums are trading near multi-year lows, presenting an attractive opportunity for consumers to hedge their exposure [3][13]. Summary by Sections Fair Value Methodology - The report develops an anchor and spread methodology to determine fair value for aluminium premiums, focusing on the price paid over the LME price for physical delivery [2][5]. - The anchor is based on the premium that an LME warehouse in Asia would pay, with a calculated warehouse incentive set at $83/t [7]. US Market Analysis - The US Midwest premium is currently trading around $839/t, with duties accounting for 70% of this premium [9][11]. - The report estimates that the US Midwest premium is undervalued by $30/t based on the current spot LME price, but advises against buying due to a bearish price forecast [11]. European Market Analysis - The Rotterdam Duty Paid premium is currently $200/t, trading at a $55-60/t discount to fair value, indicating limited downside risk [13]. - The report anticipates an increase in European imports from Canada due to US tariffs, which may further stabilize European premiums [13]. Freight Rates and Their Impact - The report suggests that freight rates have limited downside potential, with most declines already realized, impacting the European duty unpaid premium significantly [14][20]. - A forecasted decline in container freight rates could lower the European premium modestly by $6-10/t [14].