SINGAPORE: Japanese rubber futures reversed a two-day climb to close lower on Tuesday as automobile price wars and overhanging automobile supply weighed on investor sentiment.

The Osaka Exchange (OSE) rubber contract for September delivery closed down 5.6 yen, or 1.77%, at 311.4 yen ($2.01) per kg. The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery fell 275 yuan to finish at 14,280 yuan ($1,970.85) per metric ton.

China’s state planner expects an intensified price war among automakers of electric cars and plug-in hybrids this year because of overhanging supply, among other issues. Shares of electric vehicle (EV) stocks fell in premarket trade after Tesla cut prices for its EVs in major global markets, including the United States.

Japan’s Finance Minister Shunichi Suzuki said his meeting with US and South Korean counterparts last week has laid the groundwork for Tokyo to act against excessive yen moves, issuing the strongest warning to date on the chance of intervention.

The Bank of Japan is expected to project inflation will stay around its 2% target for the next three years in new forecasts due on Friday, signalling its readiness to raise interest rates again this year from current near-zero levels.

Japan’s factory activity contracted but approached the break-even point in April, a business survey showed. On the physical front, “the de-stocking process in China is ongoing, while recent hot weather may affect supply”, a Singapore-based trader said, noting these factors are supporting spot TSR20 rubber prices.