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Derivative Financial Instruments | 12 Months Ended
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Dec. 31, 2022
Derivative Financial Instruments |
Derivative Financial Instruments | ​ ​ Note 7. Derivative Financial Instruments The company is exposed to certain risks relating to its ongoing business operations. The company utilizes derivative instruments to mitigate commodity margin risk, occasionally to mitigate foreign currency exchange rate risk, and have in the past to mitigate interest rate fluctuation risk. The company routinely enters into forward exchange traded futures and option contracts to manage the price risk associated with nonferrous metals inventory, as well as purchases and sales of nonferrous (primarily aluminum and copper) and ferrous metals. The company offsets fair value amounts recognized for derivative instruments executed with the same counterparty under master netting agreements. If the company is “long” on commodity futures contracts, it means the company has more futures contracts purchased than futures contracts sold for the underlying commodity. If the company is “short” on a futures contract, it means the company has more futures contracts sold than futures contracts purchased for the underlying commodity. The following summarizes the company’s futures contract commitments as of December 31, 2022: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | Commodity Futures | ​ | Long/Short | ​ | Metric Tons | ​
​ | Aluminum | ​ | Long | ​ | 8,750 | ​
​ | Aluminum | ​ | Short | ​ | 13,850 | ​
​ | Copper | ​ | Long | ​ | 10,250 | ​
​ | Copper | ​ | Short | ​ | 28,822 | ​
​ The following summarizes the location and amounts of the fair values reported on the company’s consolidated balance sheets and gains or losses related to derivatives included in the company’s consolidated statements of income as of and for the years ended December 31 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | Asset Derivatives | ​ | Liability Derivatives | ​
​ | ​ | ​ | Fair Value | ​ | Fair Value | ​
​ | Balance sheet location | ​ | December 31, 2022 | ​ | December 31, 2021 | ​ | December 31, 2022 | ​ | December 31, 2021 | ​
Derivative instruments designated as hedges | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity futures | Other current assets | ​ | $ | 2,169 | ​ | $ | 1,278 | ​ | $ | 2,119 | ​ | $ | 7,430 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Derivative instruments not designated as hedges | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity futures | Other current assets | ​ | ​ | 2,102 | ​ | ​ | 4,319 | ​ | ​ | 5,269 | ​ | ​ | 6,171 | ​
Total derivative instruments | ​ | ​ | $ | 4,271 | ​ | $ | 5,597 | ​ | $ | 7,388 | ​ | $ | 13,601 | ​
​ ​ Note 7. Derivative Financial Instruments (Continued) The fair value of the above derivative instruments along with required margin deposit amounts with the same counterparty under master netting agreements totaled $23.5 million and $24.9 million at December 31, 2022, and 2021, respectively, and are reflected in other current assets in the consolidated balance sheets. ​
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​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Amount of | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Location of gain | ​ | ​ | gain (loss) | ​ | ​ | ​ | Location of gain | ​ | ​ | Amount of gain
​ | ​ | (loss) recognized | ​ | ​ | recognized in | ​ | Hedged items in | ​ | (loss) recognized | ​ | ​ | (loss) recognized in
​ | ​ | in income on | ​ | ​ | income on | ​ | fair value hedge | ​ | in income on | ​ | ​ | income on related
​ | ​ | derivatives | ​ | ​ | derivatives | ​ | relationships | ​ | related hedged items | ​ | ​ | hedged items
For the Year Ended | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2022 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Derivatives in fair value | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
hedging relationships | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity futures | ​ | Costs of goods sold | ​ | $ | 2,284 | ​ | Firm commitments | ​ | Costs of goods sold | ​ | $ | (2,290)
​ | ​ | ​ | ​ | ​ | ​ | ​ | Inventory | ​ | Costs of goods sold | ​ | ​ | (708)
Derivatives not designated | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | (2,998)
as hedging instruments | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity futures | ​ | Costs of goods sold | ​ | $ | 24,748 | ​ | ​ | ​ | ​ | ​ | ​ | ​
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
For the Year Ended | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2021 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Derivatives in fair value | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
hedging relationships | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity futures | ​ | Costs of goods sold | ​ | $ | (1,369) | ​ | Firm commitments | ​ | Costs of goods sold | ​ | $ | 3,354
​ | ​ | ​ | ​ | ​ | ​ | ​ | Inventory | ​ | Costs of goods sold | ​ | ​ | 1,054
Derivatives not designated | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 4,408
as hedging instruments | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity futures | ​ | Costs of goods sold | ​ | $ | (33,517) | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
For the Year Ended | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2020 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Derivatives in fair value | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
hedging relationships | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity futures | ​ | Costs of goods sold | ​ | $ | (2,004) | ​ | Firm commitments | ​ | Costs of goods sold | ​ | $ | (79)
​ | ​ | ​ | ​ | ​ | ​ | ​ | Inventory | ​ | Costs of goods sold | ​ | ​ | (482)
Derivatives not designated | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | (561)
as hedging instruments | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity futures | ​ | Costs of goods sold | ​ | $ | (17,368) | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ Derivatives accounted for as fair value hedges had ineffectiveness resulting in gains of $72,000, losses of $101,000, and gains of $68,000 for the years ended December 31, 2022, 2021, and 2020, respectively. Losses excluded from hedge effectiveness testing of $786,000 and $2.6 million increased cost of goods sold for the years ended December 31, 2022 and 2020, respectively. Gains excluded from hedge effectiveness testing of $3.1 million decreased cost of goods sold for the year ended December 31, 2021. Note 7. Derivative Financial Instruments (Continued) Derivatives accounted for as cash flow hedges resulted in net gains of $15.0 million, $40.9 million and $2.8 million recognized in other comprehensive income for the years ended December 31, 2022, 2021, and 2020, respectively. Net losses of $11.1 million were reclassified from accumulated other comprehensive income to expense for the year ended December 31, 2022. Net gains of $46.1 million and $265,000, were reclassified from accumulated other comprehensive income into income for the years ended December 31, 2021, and 2020, respectively. At December 31, 2022, the company expects to reclassify $1.2 million of net gains on derivative instruments from accumulated other comprehensive income to income during the next 12 months due to the settlement of futures contracts. The maximum term over which the company is hedging its exposure to the variability of future cash flows for forecasted transactions is less than 12 months.

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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 https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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