May 3 (Bloomberg) -- The Shanghai Futures Exchange, China’s biggest metals bourse, will offer silver futures from next week after draft contract rules received a positive response from potential investors, according to an executive.

The yuan-denominated contract will start on May 10, with the new product helping producers to control their risks, Vice President HuoRuirong said at a briefing today. Each contract will represent 15 kilos, according to the exchange website.

While silver is used in industrial processes, including the manufacture of solar panels, it’s also bought by some holders as an investment to protect against inflation. Spot prices in dollars rallied 83 percent in 2010 before dropping last year.

“Being the world’s largest silver producer and user, China’s introduction of a silver futures contract will add one more tool for its local industry to better manage the risks associated with price volatility,” Fu Peng, chief macro-economy consultant at Galaxy Futures Co., said by phone from Beijing.

The country produced more than 12,000 metric tons of silver last year, Fu said. It consumed more than 8,000 tons, of which about 40 percent was accounted for by investment demand in the form of coins and bars, he said.

Spot silver traded at $30.4075 an ounce at 5:15 p.m. in Beijing after declining 27 percent over the past year. The metal will trade at $34 an ounce this year, according to the median of analysts’ forecast tracked by Bloomberg.

The new product will be in addition to a silver contract for deferred delivery, or the so-called silver T+D contract, traded on the Shanghai Gold Exchange, Fu said. That’s offered in minimum lots of 1 kilogram.

“Given the contract size difference, we reckon that most retail investors may still prefer trading in the silver T+D contract, while institutional investors, such as users and miners, might want to try out the new contract,” Fu said.