The market was also under threat from a growing domestic rubber stockpile and prices may fall toward record lows depending on movements in dollar/yen rates, they said. The benchmark August rubber futures on the Tokyo Commodity Exchange (TOCOM) breached key resistance at 80 yen per kg on Friday, following Thursday's news about Thailand. A senior official at Thailand's foreign ministry said on Thursday that the country sent an official letter conveying its intentions to both INRO and the United Nations Conference on Trade and Development. Thailand's withdrawal will automatically become effective one year after submitting the letter.

Traders said the news had dashed any market speculation that Thailand might change its decision. "TOCOM's decline thismorning reflected disappointment among participants at the Thai action," one brokerage analyst said. "The news added to the bearish mood in the market."

The analyst expected the benchmark August contract to trade in a range from 77 to 82 yen per kg next week. It was down 1.0 yen at 79.9 yen at midday on Friday. This year's low for TOCOM benchmark rubber was 77.0 yen on February 15. The record low for a benchmark contract was 76.9 yen on September 28, 1993.

Traders were also concerned about growing rubber stockpiles at domestic warehouses. Data released this week by the Rubber Trade Association of Japan shows that crude rubber stocks at Japanese private warehouses were 37,091 tonnes as on March 10, up sharply from 33,892 tonnes at the end of February.A trader at a Japanese trading house said rubber imports were rising as Japanese firms have purchased a large amount of rubber to take advantage of sharply lower rubber prices in south east Asia. "I expect imports will continue rising and domestic stockpileswill reach 40,000 tonnes around this summer," he said. The market is also focused on the spot March contract's expiry, with some traders concerned that the contract may breach key support at 70 yen per kg due to slack demand. "I expect the spot contract to expire at a price between 70 and 75 yen. But I cannot rule out the possibility that it could slip below 70," said an analyst.