Officials from the exchange, one of three major commodity exchanges in the country, got approval from the China Securities Regulatory Commission, the securities and futures regulator, last week to launch the contract.
"The coking coal futures contract will benefit China's coal, steel and coking industries," said Liu Xingqiang, the exchange's chairman.
Coking coal producers can adjust their production levels based on futures prices to reduce risk, and steel companies which need coking coal as their main raw material, can manage costs better based on its upstream cost, he said.
Coking coal usually accounts for about 20 percent of a steel mill's production costs.
But just as the rising price of imported iron ore has raised concerns in China, so too have the increased imports of coking coal.
China has become the world's largest coking coal producer and consumer, as the country's economic growth continues to create huge demand for steel.
Imports of coking coal takes up about 10 percent of the country's total consumption.
It imported 20 million metric tons of coking coal in 2010, the highest ever import amount for the country. That dropped to 13 million tons in 2011 because of soaring international coking coal prices.
China produced 155 million tons of coking coal in 2011, and consumed about 170 million tons.
"Although China's coking coal imports account for almost 20 percent of international trading volume, Chinese companies don't have much pricing power on the international market," said Liu.
"The current coking coal pricing mechanism is not transparent enough, and cannot reflect the supply and demand of the market.
"This new trading platform will help narrow the price gap between imported and domestic coking coal."