The natural evolution from fixed-price, long-term settlements to actively traded futures contracts for the pricing of iron ore was too slow to allow most speculators to profit from one of history's greatest bull markets.

But now the tables have turned in the rapidly maturing market in favour of end users and China is encouraging broader market interest to wrest pricing power away from iron ore miners.

Six years ago greed clearly got the better of miners, led by BHP Billiton, as they forced the shift from annual settlements to quarterly contracts, then monthly spot price-benchmarked contracts to maximise profits in the screaming bull market.

The miners benefited as steel mills and bulk traders drove the price to a peak of $US185 a tonne in 2011.

But it has clearly been a case of "be careful what you wish for" as prices plummeted to five-year lows without the smoothing of longer contracts.

The advent of physically backed futures trading on the Dalian exchange in October 2013 offered the opportunity for buyers and non-producer sellers to hedge their exposure just as the iron ore market started its descent into a bear market.

Prior to this there were cash settled futures on the Singapore Exchange and the IntercontinentalExchange though these attracted little interest.

There were also over-the-counter iron ore swap contracts, derivative contracts in which one party agrees to pay the other party a fixed price in return for receiving the average iron ore spot price over the term of the swap.

The Dalian futures debut price was $US160/t and the success of the contracts stemmed from the physical backing of port and steel mill stockpiles.

Although volume was low in the beginning, this year Dalian futures became a more visible price indicator than the obscure spot price samples aggregated by trading firm Platts and Metal Bulletin and released well after Asian markets had closed.

Volume started to rise mid-year, soaring from about 60,000 contracts in August to a peak of 1.5 million on December 4, while the 15-day average is about 660,000.

Each contract is for 100 tonnes of iron ore worth about $US7100 at current prices, so about two months of Chinese ore imports - 67 million tonnes in November - changed hands at the market peak volume.

However, these Chinese yuan denominated futures are also a far from perfect market price signal because trading is limited to Chinese traders.

It is probably no coincidence that the bear market intensified as futures volumes soared and steel mills could point to weaker futures when haggling over prices for shiploads of ore on the open seaborne market.

"The more investor-heavy customer base of the Dalian Commodity Exchange has continued to short sell for some time now on Chinese economic concern," Jamie Pearce, head of SSY Futures Singapore, said.

Last month Reuters reported there was a push in China to open Dalian trading to foreigners.

"If China wants to be a price maker, they would need producers to support Dalian futures and have it (US) dollar-denominated to attract international investors," ANZ commodity strategist Daniel Hynes told Reuters.

The Dalian Exchange announced it would "introduce qualified foreign investors to increase its global influence through bonded delivery of iron ore".

Forcing its hand was CME Group, which dates its origins to grain merchants who established the Chicago Board of Trade in 1848. It has launched futures for 62 per cent iron and the lower grade 58 per cent content ore.

CME said the first trade on December 8 was between Caravel Metallurgical and a big international trading house, brokered by GFI Group. Trading volumes are rising, albeit slowly.

"This new contract adds to the broad array of risk management products we offer our clients in the iron ore, coal and freight derivatives arena," GFI head of iron ore trading Toby Joyce said after the first contract traded.

For now, the Dalian futures dominate but do not offer a precise indicator of spot moves with more liquid futures driven by speculators usually exaggerating price swings in both directions.

Eventually broader interest from miners, steel mills, manufacturers, investors and speculators should lead to steadier volumes, liquid trading and an iron ore benchmark that all market participants comfortably accept as the fair price.

Then, changes in the outlook for Chinese growth and steel demand will likely be more quickly reflected in the prices received by Australian iron ore producers.