Aluminum prices dropped to a three-month low as progress in Middle East peace talks raised expectations for renewed metal supplies from the conflict region. The metal fell as much as 1.2% to $3,321 a ton on the London Metal Exchange, the lowest level since March 27, with prices continuing downward in Shanghai trading.

The decline follows an 11% price surge this year after the Middle East war disrupted production in a region that normally contributes roughly 9% of global supply. Persian Gulf smelters have worked to replenish reserves despite shipping challenges through the Strait of Hormuz, while producers in China and Indonesia accelerated output to offset supply shortfalls.

Chinese traders capitalized on inconsistent tax regulations to export stranded aluminum wire, shipping over 50,000 tons in May — the highest monthly volume since 2020. These adaptive measures helped cushion what became one of the largest supply shocks in aluminum market history.

Chaos Ternary Futures noted that geopolitical risks have eased with US-Iran agreements, suggesting the Strait of Hormuz could reopen. The broader metals market showed weakness, with copper slipping 0.3% to $13,612 a ton, as investors priced in improved supply prospects.