China's top securities regulator said on Friday that it has approved iron ore futures trading on the Dalian Commodity Exchange.
The approval came one week after the relaunch of treasury-bond futures on the China Financial Futures Exchange in Shanghai.
"The commodity exchange in Dalian must still complete all of the pre-listing procedures and choose a proper debut according to market conditions," a spokesman for the China Securities Regulatory Commission said.
Iron ore futures will foster a pricing system for the product based on actual supply-demand conditions and reduce price volatility in the global commodity market, the spokesman added.
The Dalian exchange has already completed margin and risk-management systems for the new contracts. The exchange is seeking to prevent huge abnormal transactions and market fluctuations.
Iron ore is the most important raw material for iron and steel producers. In 2012, the world's total output of iron ore was about 1.86 billion metric tons and the trade volume reached 1.13 billion tons.
Four countries - Australia, China, Brazil and India - produce about 80 percent of the world's iron ore. China is the second-largest producer, the biggest importer and the largest spot trading market for iron ore.
Last year, China produced 440 million tons of iron ore, imported 740 million tons and consumed 1.05 billion tons. More than 60 percent of the nation's consumption was imported.
Liu Xingqiang, president of the Dalian exchange, said that a variety of futures products can reduce the potential risks for industries by signaling changes in global commodity prices.
"The exchange will research and provide more financial derivatives for the commodity market and support the transformation of the nation's economic growth pattern," Liu said.
On Friday, the CSRC also approved steam coal futures for the Zhengzhou Commodity Exchange.
Zhang Fan, president of the Zhengzhou exchange, said that simulated trading in sugar futures will start this month and the application will be sent to the CSRC soon.
Asphalt futures and crude oil futures for the Shanghai Futures Exchange are awaiting final approval.
The State Council, China's cabinet, released a statement in March, in which it said that a major task in financial system development was "to build a multi-level capital market and accelerate the construction of the futures market".