Derivative Instruments

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Commodity Risk Management

The Company uses derivative instruments to reduce price volatility risk on raw materials and products as a substantial portion of its raw materials and products are commodities whose prices fluctuate as market supply and demand fundamentals change. Business strategies to protect against such instability include ethylene product feedstock flexibility and moving downstream into the olefins and vinyls products where pricing is more stable. The Company does not use derivative instruments to engage in speculative activities.

For derivative instruments that are designated and qualify as fair value hedges, the gains or losses on the derivative instruments, as well as the offsetting losses or gains on the hedged items attributable to the hedged risk, are included in cost of sales in the consolidated statement of operations. The Company had no derivative instruments that were designated as fair value hedges for the three months ended March 31, 2015 and 2014.

Gains and losses from changes in the fair value of derivative instruments that are not designated as hedging instruments were included in gross profit in the consolidated statements of operations for the three months ended March 31, 2015 and 2014.

The exposure on commodity derivatives used for price risk management includes the risk that the counterparty will not pay if the market declines below the established fixed price. In such case, the Company would lose the benefit of the derivative differential on the volume of the commodities covered. In any event, the Company would continue to receive the market price on the actual volume hedged. The Company also bears the risk that it could lose the benefit of market improvements over the fixed derivative price for the term and volume of the derivative instruments (as such improvements would accrue to the benefit of the counterparty).

Disclosures related to the Company's derivative assets and derivative liabilities subject to enforceable master netting arrangements have not been presented as they are not material to the Company's consolidated balance sheets at March 31, 2015 and December 31, 2014.

The fair values of derivative instruments in the Company's consolidated balance sheets were as follows:

	Derivative Assets
	Balance Sheet Location	Fair Value as of
		March 31, 2015		December 31, 2014
Not designated as hedging instruments
Commodity forward contracts	Accounts receivable, net	$	2,927	$	3,145
Commodity forward contracts	Deferred charges and    other assets, net	1,557		—
Total derivative assets		$	4,484	$	3,145

	Derivative Liabilities
	Balance Sheet Location	Fair Value as of
		March 31, 2015		December 31, 2014
Not designated as hedging instruments
Commodity forward contracts	Accrued liabilities	$	5,060	$	6,549
Commodity forward contracts	Other liabilities	1,801		3,559
Total derivative liabilities		$	6,861	$	10,108

The impact of derivative instruments that have not been designated as hedges on the Company's consolidated statements of operations were as follows:

Derivatives Not Designated as    Hedging Instruments	Location of Gain (Loss) Recognized in  Income on Derivative	Three Months Ended March 31,
		2015		2014
Commodity forward contracts	Gross profit	$	4,241	$	(611	)

See Note 12 for the fair value of the Company's derivative instruments.