Natural Gas Derivative Instruments

9 Months Ended

Sep. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Natural Gas Derivative Instruments

3. Natural Gas Derivative Instruments

Natural gas is used to fire the kilns at the Company’s manufacturing plants.  In an effort to mitigate volatility in the cost of natural gas purchases and reduce exposure to short term spikes in the price of this commodity, we previously contracted in advance for portions of our future natural gas requirements.  Due to the severe decline in industry activity beginning in early 2015, the Company significantly reduced production levels and consequently did not take delivery of all of the contracted natural gas quantities.  As a result, the Company had accounted for the relevant contracts as derivative instruments.  However, as of December 31, 2018, the last derivative contract expired and no future natural gas obligations existed.

During the three months ended September 30, 2019 and 2018, the Company recognized a gain on derivative instruments of $0 and $217, respectively, in cost of sales.  During the nine months ended September 30, 2019 and 2018, the Company recognized a gain on derivative instruments of $0 and $847, respectively, in cost of sales.