Zinc prices are expected to retreat from recent highs over the rest of the year as lacklustre demand offsets supply disruptions, analysts say.

The metal used to galvanise steel is up more than 13% on the London Metal Exchange in 2026 due to tight ore supply and smelter production losses. Outperforming copper, aluminium, lead and nickel, zinc last month climbed to its highest in almost four years at $3 658 per metric ton.

Tighter-than-expected supply has prompted analysts to revise up their 2026 price forecasts, but while they see zinc remaining elevated in the second half of the year, they don't expect it to hold on to current levels above $3,500.

"We're going into the quieter second half for steel," said Panmure Liberum analyst Tom Price, noting that China's steel production rate in 2026 has underperformed its rolling five to six-year average.

"If the production for steel falls, that is a primordial demand driver for zinc," said Price, who sees the metal slipping to $3 100 a ton in the fourth quarter.

BMI, a unit of Fitch Solutions, forecasts zinc will fall further to $3,000 by then, as long positioning sparked by an explosion at Kazzinc's smelter and a fire at Nexa Resources' Cajamarquilla plant in May runs up against the reality of slack demand.

"Prices are likely to ease from current levels as the headline-driven risk premium attached to recent supply disruptions fades and the market moves into a narrow surplus," BMI said in a note.

It sees a surplus of 34 000 tons this year in a market estimated at around 14-million tons.

Wood Mackenzie's research director for zinc markets, Jonathan Leng, expects prices to dip to around $3 350 by end-2026, with global demand growth at a weak 0.9%. But he still projects an 80 000-ton deficit and warns LME zinc stocks of just over 100 000 tons are only a thin buffer.

"If there's any more disruption to smelting production, we could see another spike higher," Leng said.

The recent opening of the arbitrage window to ship zinc from the Shanghai Futures Exchange to LME warehouses could drag LME prices lower, Leng said.