The Company may use derivatives to partially offset its business exposure to commodity price, foreign currency, and interest rate fluctuations and their related impact on expected future cash flows and certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, Company policy, accounting considerations, or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in commodity pricing, foreign currency exchange, or interest rates. Interest rate swaps are entered into to manage interest rate risk associated with the Company’s floating-rate borrowings. We use foreign currency exchange contracts to hedge variability in cash flows in our Canada, Mexico, and China operations when a payment currency is different from our functional currency. From time to time, we may enter into fixed price sales contracts with our customers for certain of our inventory components. We may enter into metal commodity futures and options contracts to reduce volatility in the price of these metals. We may also enter into fixed price natural gas contracts and diesel fuel derivative contracts to manage the price risk of forecasted purchases of natural gas and diesel fuel.

We currently have one receive variable, pay fixed, interest rate swap to manage the exposure to variable interest rates of the Ryerson Credit Facility. In June 2019, we entered into a forward agreement for $60 million of “pay fixed” interest at 1.729% through June 2022 and in November 2019, we entered into a forward agreement for $100 million of “pay fixed” interest at 1.539% through November 2022. Upon entering into the swap, the interest rate reset date and critical terms matched the terms of our existing debt and

anticipated critical terms of future debt under the Ryerson Credit Facility; however, this was no longer the case once the Ryerson Credit Facility was amended on November 5, 2020. As such, effective November 1, 2020 the Company de-designated its interest rate swap and terminated its hedge accounting treatment. Prior to de-designation, the Company marked this interest rate swap to market with changes in fair value being recorded in accumulated other comprehensive income. Subsequent to de-designation, changes in fair value are recorded in current earnings. The unrealized loss as of the de-designation date remains in accumulated other comprehensive income and is being amortized into earnings as the forecasted interest payments affect earnings. The fair value of the interest rate swap as of June 30, 2022 was a net asset of $0.3 million.

The Company currently does not account for its commodity and foreign exchange derivative contracts as hedges but rather marks them to market with a corresponding offset to current earnings.

The Company regularly reviews the creditworthiness of its derivative counterparties and does not expect to incur a significant loss from the failure of any counterparties to perform under any agreements.

In connection with the redemption options under the 2028 Notes, the Company recorded an embedded derivative in other current assets on its Condensed Consolidated Balance Sheet, with changes in value recorded within other income and (expense), net within the Condensed Consolidated Statement of Comprehensive Income, see Note 8: Long-term debt, for further details. Embedded derivatives are separated from the host contract and carried at fair value when: (a) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; (b) the instrument is not measured at fair value under other applicable GAAP standards, and (c) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. The Company has concluded that the embedded derivative within the 2028 Notes met these criteria and, as such, must be valued separate and apart from the 2028 Notes at fair value each reporting period.

The following table summarizes the location and fair value amount of our derivative instruments reported in our Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021:


	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	June 30, 2022		December 31, 2021		Balance Sheet Location	June 30, 2022		December 31, 2021
Derivatives not designated as hedging instruments under ASC 815	(In millions)
Metal commodity contracts	Prepaid expenses and other current assets	$	19.3	$	13.0	Other accrued liabilities	$	26.9	$	35.1
Diesel fuel commodity contracts	Prepaid expenses and other current assets		0.8		—	Other accrued liabilities		—		—
2028 Notes embedded derivative	Prepaid expenses and other current assets		—		0.2	Other accrued liabilities		—		—
Interest rate swaps	Prepaid expenses and other current assets		0.3		—	Other accrued liabilities		—		1.4
Total derivatives		$	20.4	$	13.2		$	26.9	$	36.5

The following table presents the volume of the Company’s activity in derivative instruments as of June 30, 2022 and December 31, 2021:


	Notional Amount
Derivative Instruments	At June 30, 2022		At December 31, 2021		Unit of Measurement
Hot roll coil swap contracts		123,158		176,859	Tons
Aluminum swap contracts		9,354		20,949	Tons
Nickel swap contracts		550		857	Tons
Diesel fuel swap contracts		490,000		840,000	Gallons
Foreign currency exchange contracts	3.0 million		4.5 million		U.S. dollars
Interest rate swap contracts	100 million		160 million		U.S. dollars

The following table summarizes the location and amount of gains and losses on derivatives not designated as hedging instruments reported in our Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021:


Derivatives not designated as	Location of Gain/(Loss)	Amount of Gain/(Loss) Recognized in Income on Derivatives
hedging instruments	Recognized in Income	Three Months Ended June 30,						Six Months Ended June 30,
under ASC 815	on Derivatives	2022			2021			2022			2021

Metal commodity contracts	Cost of materials sold	$	4.0		$	(29.4	)	$	1.4		$	(40.1	)
Diesel fuel commodity contracts	Warehousing, delivery, selling, general, and administrative		0.5			—			1.2			—
2028 Notes embedded derivative	Other income and (expense), net		—			(1.3	)		(0.2	)		(1.0	)
Foreign exchange contracts	Other income and (expense), net		—			0.1			—			0.2
Interest rate swaps	Interest and other expense on debt		0.2			—			0.8			—
Total		$	4.7		$	(30.6	)	$	3.2		$	(40.9	)
		Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Interest rate swaps (subsequent to de-designation)	Interest and other expense on debt	$	(0.7	)	$	(0.6	)	$	(1.4	)	$	(1.1	)

As of June 30, 2022, the portion of the interest rate swap fair value that would be reclassified into earnings during the next 12 months as interest expense is approximately $0.5 million.

To increase consistency and comparability in fair value measurements, FASB ASC 820 “Fair Value Measurement” (“ASC 820”) establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

The following table presents assets and liabilities measured and recorded at fair value on our Condensed Consolidated Balance Sheet on a recurring basis and their level within the fair value hierarchy as of June 30, 2022:


	At June 30, 2022
	Level 1		Level 2		Level 3
	(In millions)
Assets
Derivatives:
Derivatives not designated as hedging instruments under ASC 815:
Metal commodity contracts	$	—	$	19.3	$	—
Diesel fuel commodity contracts		—		0.8		—
Interest rate swaps		—		0.3		—
Total derivatives	$	—	$	20.4	$	—
Liabilities
Derivatives:
Derivatives not designated as hedging instruments under ASC 815:
Metal commodity contracts	$	—	$	26.9	$	—
Total derivatives	$	—	$	26.9	$	—


	At December 31, 2021
	Level 1		Level 2		Level 3
	(In millions)
Assets
Derivatives:
Derivatives not designated as hedging instruments under ASC 815:
Metal commodity contracts	$	—	$	13.0	$	—
2028 Notes embedded derivative		—		—		0.2
Total derivatives	$	—	$	13.0	$	0.2
Liabilities
Derivatives:
Derivatives not designated as hedging instruments under ASC 815:
Metal commodity contracts	$	—	$	35.1	$	—
Interest rate swaps		—		1.4		—
Total derivatives	$	—	$	36.5	$	—

The fair value of each commodity, diesel fuel, and interest rate swap derivative contract is determined using Level 2 inputs and the market approach valuation technique, as described in ASC 820. The Company has various commodity derivatives to lock in hot roll coil, nickel, aluminum, and diesel fuel prices for varying time periods. The fair value of hot roll coil, nickel, aluminum, and diesel fuel derivatives is determined based on the spot price each individual contract was purchased at and compared with the one-month daily average actual spot price on the Chicago Mercantile Exchange (hot roll coil and diesel fuel) and the London Metals Exchange (nickel and aluminum), respectively, for the commodity on the valuation date. In addition, the Company has numerous foreign exchange contracts to hedge variability in cash flows when a payment currency is different from our functional currency. The Company defines the fair value of foreign exchange contracts as the amount of the difference between the contracted and current market value at the end of the period. The Company estimates the current market value of foreign exchange contracts by obtaining month-end market quotes of foreign exchange rates and forward rates for contracts with similar terms. The Company uses the exchange rates provided by Reuters. Each commodity, diesel fuel, and foreign exchange contract term varies in the number of months, but in general, contracts are between 1 to 12 months in length. The fair value of our interest rate swap is based on the sum of all future net present value cash flows for the fixed and floating leg of the swap. The future cash flows are derived based on the terms of our interest rate swap, as well as published discount factors, and projected forward LIBOR rates.

The fair value of the embedded derivative is determined using Level 3 inputs based on the Black-Derman-Toy lattice model and the “with-and-without” approach. This method estimates the value of the 2028 Notes both with and without the embedded derivative. The value of the embedded derivative is the difference between the two methods. The value of the 2028 Notes with the embedded derivative is based on recent trading prices of the 2028 Notes (Level 1 inputs). Determining the value of the 2028 Notes without the embedded derivative requires significant judgements made by management such as the probability of redemption linked transactions occurring, the cash flows expected to be generated from these transactions, as well as the timing of these transactions (Level 3 inputs).

The carrying and estimated fair values of our financial instruments at June 30, 2022 and December 31, 2021 were as follows:


	At June 30, 2022				At December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)
Cash and cash equivalents	$	41.4	$	41.4	$	51.2	$	51.2
Restricted cash		1.2		1.2		1.2		1.2
Receivables less provisions		756.5		756.5		630.8		630.8
Accounts payable		656.3		656.3		481.2		481.2
Long-term debt, including current portion		533.5		535.0		639.3		666.8

The estimated fair value of the Company’s cash and cash equivalents, restricted cash, receivables less provisions, and accounts payable approximate their carrying amounts due to the short-term nature of these financial instruments. The estimated fair value of the Company’s long-term debt and the current portions thereof is determined by using quoted market prices of Company debt securities (Level 2 inputs).