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DERIVATIVE INSTRUMENTS:

9 Months Ended

Sep. 30, 2021

DERIVATIVE INSTRUMENTS:

DERIVATIVE INSTRUMENTS:

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NOTE 6 — DERIVATIVE INSTRUMENTS:

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From time to time, the Company uses derivative instruments to manage its cash flows exposure to changes in commodity prices. The Company does not enter into derivative contracts unless it anticipates that the possibility exists that future activity will expose the Company’s future cash flows to deterioration. Derivative contracts for commodities are entered into to manage the price risk associated with forecasted purchases of the commodities that the Company uses in its manufacturing process.

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Cash Flow Hedges of Natural Gas

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The Company’s objective in using natural gas derivatives is to protect the stability of natural gas costs and manage exposure to natural gas price increases. To protect natural gas costs from estimated price increases in the coming winter season, the Company acquired two derivative instruments that begin in November 2021 and end in March 2022.

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Derivative instruments are as follows:

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​	​	​	​	​	​	​	​
​	​	Call		​	Financial Swap		​
Derivatives designated as hedging instruments under ASC 815	​	Option		​	Cash Settlement		​
​	​	​	​	​	​	​	​
Commodity contracts	​	​	Natural gas	​	​	Natural gas	​
Gas volume (MMBTUs)	​	​	5,285,000	​	​	5,285,000	​
Fixed price ($)	​	​	3.75	​	​	0.55	​
Total option premium (millions of $)	​		N/A	​	​	2.9	​
Estimated fair value of assets (liabilities) as of September 30, 2021 (millions of $)	​		12.1	​	​	(2.9)	​
Effect of derivative instruments on the consolidated Statement of Earnings (millions of $)	​		—	​	​	—	​
(Favorable) unfavorable effect in OCI - net of deferred income taxes (millions of $)	​	​	(8.4)	​	​	2.0	​

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The Company assessed these derivative instruments as Cash Flow Hedges. As such, the effective portions of said hedges are initially reported in Other Comprehensive Income (OCI) and are reclassified as earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. Any ineffective portions of these derivatives would be reported in earnings during the current period.

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As of December 31, 2020, and September 30, 2020, the Company did not hold any derivative instruments.

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- References

No definition available.

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- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-URI http://asc.fasb.org/topic&trid=2229140

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