Note 9 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2018

9.	Fair Value of Financial Instruments:

During the

three

months ended

September 30, 2018,

there were

transfers of financial assets between Levels

fair value measurements. There have been

changes in the valuation methodologies since

December

31,

2017.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value as of

September 30, 2018

and

December

31,

2017:

Metals swaps and embedded customer derivatives

– Determined by using Level

inputs that include the price of nickel indexed to the LME. The fair value is determined based on quoted market prices and reflects the estimated amounts the Company would pay or receive to terminate the nickel swaps.

Interest rate swaps

– Based on the present value of the expected future cash flows, considering the risks involved, and using discount rates appropriate for the maturity date. Market observable Level

inputs are used to determine the present value of future cash flows.

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company:

	Value of Items Recorded at Fair Value
	As of September 30, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Metal swaps	$	-	$	32	$	-	$	32
Total assets at fair value	$	-	$	32	$	-	$	32

Liabilities:
Embedded customer derivative	$	-	$	32	$	-	$	32
Total liabilities recorded at fair value	$	-	$	32	$	-	$	32

	As of September 30, 2018
(in thousands)	Level 1		Level 2		Level 3		Total
Liabilities:
Revolver		-		304,484		-		304,484
Total liabilities not recorded at fair value	$	-	$	304,484	$	-	$	304,484

The value of the items

not

recorded at fair value represent the carrying value of the liabilities.

	As of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Metals swaps	$	-	$	382	$	-	$	382
Total assets at fair value	$	-	$	382	$	-	$	382

Liabilities:
Embedded customer derivatives	$	-	$	382	$	-	$	382
Interest rate swap (CTI)		-		5		-		5
Total liabilities recorded at fair value	$	-	$	387	$	-	$	387

	As of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3		Total
Liabilities:
IRB	$	930	$	-	$	-	$	930
Revolver		-		196,235		-		196,235
Total liabilities not recorded at fair value	$	930	$	196,235	$	-	$	197,165

The fair value of the IRB was determined using Level

inputs. The carrying value and the fair value of the IRB that qualified as financial instruments were

$0.9

million at

December 31, 2017.

The fair value of the revolver is determined using Level

inputs. The Level

fair value of the Company's long-term debt was estimated using prevailing market interest rates on debt with similar credit worthiness, terms and maturities.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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