By Emily Ou Yong
Japanese rubber futures rose on Tuesday, as the Japanese yen weakened to a fresh 40-year low, while data showing China's growing factory activity in June lifted sentiment in the world's largest tyre maker.
The Osaka Exchange (OSE) rubber contract for December delivery TOCOM:TRB1!, TOCOM:TRB1! was up 4.2 yen, or 1.02%, at 414.6 yen ($2.56) per kg.
The contract has lost 1.78% so far this month, and eyed its first monthly decline since January.
The rubber contract on the Shanghai Futures Exchange (SHFE) for September delivery SHFE:RU1! rose 225 yuan, or 1.36%, to 16,705 yuan ($2,460.92) per metric ton.
The most active September butadiene rubber contract on the SHFE (SHBRv1) soared 335 yuan, or 2.85%, to 12,110 yuan per metric ton.
The yen FX_IDC:USDJPY accelerated its decline to hit 162.41 in Tuesday morning trade after breaching the 162-per-dollar level for the first time since 1986, fuelling speculation that Tokyo could intervene in the market at any time.
A weaker currency makes yen-denominated assets more affordable to overseas buyers.
China's factory activity returned to expansion in June, driven by demand for chips, computers and other AI-related products, as robust export orders and front-loading to the United States to get ahead of tariffs offset weakness elsewhere in the economy.
As the world's top consumer of rubber through its tire and automotive sectors, China's stabilising industrial activity offers some support to rubber demand expectations, even though the recovery remains uneven.
The front-month rubber contract on Singapore Exchange's SICOM platform for July delivery SGX:TF1! last traded at 207 U.S. cents per kg, down 2.3% as of 0700 GMT.
($1 = 162.2400 yen)
($1 = 6.7881 yuan)