Around the world, analysts and traders are grappling with the biggest shakeup in the 60-year history of liquefied natural gas: The emergence of two new superpowers, the U.S. and China, who are bringing more uncertainty and price fluctuations to a once-staid commodity market.
China became the biggest importer of liquefied natural gas in December, overtaking Japan for the first time since it pioneered the industry in the 1970s. Meanwhile, the U.S. is set to become the world’s top exporter of the fossil fuel on an annual basis later this year, beating out cornerstone suppliers Qatar and Australia.
Neither of the two superpowers are as predictable as their predecessors, and data from China is particularly hard to come by. As a result, LNG prices have seen wild swings as it’s become a traded commodity, similar to crude oil. To keep up, trading desks have proliferated globally, with Japanese LNG giants like Jera Corp. and Tokyo Gas Co. set up their own, while banks like Macquarie Group and Citigroup Inc. are hiring traders to cash in on the volatility.
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