* LME/ShFE arb: bit.ly/2wZSAEz
* GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl (Adds closing prices)
By Pratima Desai
LONDON, June 11 (Reuters) - Copper prices slid on Monday as fears about output disruption at the Escondida mine in Chile receded, but worries about supplies from Vedanta’s copper smelter in India and a softer dollar provided some support.
Benchmark copper on the London Metal Exchange ended down 0.8 percent at $7,255 a tonne. Last week, the metal used widely in the power and construction industries touched $7,348, its highest since January 2014.
“Labour negotiations to agree a new contract before the end of June are the big factor. Copper prices will unravel if there is no strike, back towards $6,900/$7,000,” said Societe Generale analyst Robin Bhar.
“Vedanta’s sterlite smelter closure points to some tightening, we don’t know how long it’s going to be closed for. We would expect Vedanta to challenge the ruling in court.”
ESCONDIDA: The union at BHP’s, Escondida copper mine in Chile said on Friday it saw a “favorable scenario” for reaching a deal on a new labour contract with the company, citing higher copper prices.
In a letter to its members published on its website, the union at the world’s largest copper mine said BHP had promised to respond to its recent proposal for a new contract by 1900 GMT on Monday.
VEDANTA: The Indian state of Tamil Nadu ordered the permanent closure of a copper smelter controlled by Vedanta Resources in May after 13 people protesting to demand its shutdown on environmental grounds were killed.
The smelter has capacity to produce 400,000 tonnes a year, a fair chunk of global supplies estimated at around 24 million tonnes this year.
CHINA: Signs of robust demand from top consumer China are also expected to underpin copper prices.
China imported 475,000 tonnes of unwrought copper and copper products last month, the largest since Dec. 2016. It was the highest May figure for at least a decade, up 22 percent from the same month last year and up 8 percent from April.
DOLLAR: A lower U.S. currency makes dollar-denominated commodities cheaper for non-U.S. firms, which could potentially boost demand for industrial metals.
TRADE WAR: Traders and analysts say renewed fears of a trade war in the wake of a divisive G7 meeting over the weekend in Canada were weighing on the base complex.
LME WARRANTS: Traders are watching a large position holding between 40 to 49 percent copper warrants, which has fuelled worries about a tight LME market and created a premium for the cash contract over the 3-month contract.
PRICES: Aluminium and zinc ended little changed at $2,301 and $3,201 respectively, tin shed 0.2 percent to $21,175 and nickel lost 0.8 percent to $15,290. Lead was untraded at the close, but bid 0.3 percent higher at $2,474 a tonne.
Editing by Susan Fenton and Mark Potter