LONDON, July 31 (Reuters) – Copper prices slipped on Tuesday as data showing slower growth in China’s manufacturing sector fuelled nervousness about demand in the top consumer, but labour negotiations at major producer Codelco helped underpin sentiment. Benchmark copper on the London Metal Exchange was down 0.5 percent at $6,216 a tonne at 1018 GMT. “The PMI data bore out to some extent our expectation that the Chinese economy would show signs of slowdown in the second half of the year,” Capital Economics analyst Caroline Bain said. “The possibility of disruptions in Chile are significant and Chinese authorities loosening could mean we start to see some support coming through.” Copper prices are on course for a 6.1 percent drop in July, which would mark their steepest monthly fall since August 2016, having also been driven down by fears of a China-U.S. trade war.

CHINA: Growth in China’s manufacturing sector slowed more than expected in July, as the worsening trade dispute with Washington, bad weather and weaker domestic demand weighed on factory activity.

China’s official Purchasing Managers’ Index (PMI) released on Tuesday fell to 51.2 in July, from 51.5 in June and below the 51.3 in a Reuters poll of economists.

CHUQUICAMATA: Workers at Codelco’s Chuquicamata copper mine in Chile, the state miner’s second largest by output, walked off the job on Monday and blocked access to the mine, union leaders said, in a move criticised as “illegal” by Codelco.

ESCONDIDA: The union at BHP’s Escondida mine in Chile, the world’s largest copper deposit, is expected to overwhelmingly reject the final contract offer from the Anglo-Australian miner, increasing the likelihood of a strike, a union leader told Reuters on Monday.

Union members have until Wednesday to finish voting on the company’s proposal, when the union will conduct an official count. After that, either party can call for government-mediated arbitration that could last up to 10 days.

COPPER: Traders are watching a large holding of copper warrants and cash contracts – between 50 and 79 percent – as it may mean nearby tightness on the LME market.

TIN: Also in focus is a large tin position holding between 50 and 79 percent of cash contracts and warrants, which could see the premium for the cash over the three-month contract rise further towards the highs of $260 a tonne seen January.

The premium is currently around $124 a tonne. CMSN0-3

PRICES: Aluminium CMAL0-3 was down 0.6 percent at $2,081, zinc rose 1.1 percent to $2,585, lead gained 0.7 percent to $2,168, tin was up 0.3 percent at $20,080 and nickel climbed 0.3 percent to $13,900.