The Shanghai Futures Exchange (SHFE) has set out its wire rod and rebar futures contracts and formulated guidelines on delivery and risk control, its president said.

"The market conditions are right. It's a good time to launch steel futures trading this year," Yang Maijun, president of SHFE, said at the Far East Steel Conference in Beijing.

Yang, a former director of the China Securities Regulatory Commission, said the regulator is likely to approve the scheme "very soon".

Rebar and wire rods are among the most common steel products used for construction in China and it will be relatively easy to introduce them as futures contracts, Yang said.

At the same conference, Qi Xiangdong, vice-chairman of the China Iron and Steel Association (CISA), said hedging tools are urgently needed because China, the world's largest, but highly fragmented, steel market is increasingly vulnerable to international commodity price swings.

Industry analysts shared Qi's concern. "Once there's steel futures trading, users and producers can sign futures contracts to minimize risks associated with volatile prices," a recent steel research report by CITIC Securities said.

Apart from serving steel producers and traders, the Shanghai futures bourse also plans to encourage financial institutions such as commercial banks and securities firms to engage in steel futures trading, Yang said.

The exchange's plan to trade steel futures dates back to early 2006, but was delayed due to the CISA's fears of volatile futures trade impacting the spot market and causing excessive market speculation.

Copper, aluminum, zinc and gold are currently traded on the SHFE.

SHFE trading totaled 23 trillion yuan ($3.28 trillion) last year, up 83 percent year-on-year.