DERIVATIVES: Nucor periodically uses derivative financial instruments primarily to partially manage its exposure to price risk related to natural gas purchases used in the production process as well as to scrap, copper and aluminum purchased for resale to its customers. In addition, Nucor periodically uses derivatives to partially manage its exposure to changes in interest rates on outstanding debt instruments and uses forward foreign exchange contracts to hedge cash flows associated with certain assets and liabilities, firm commitments and anticipated transactions.

Nucor recognizes all derivative instruments in the condensed consolidated balance sheets at fair value. Any resulting changes in fair value are recorded as adjustments to other comprehensive income (loss), net of tax, or recognized in net earnings, as appropriate.

At July 1, 2017, natural gas swaps covering approximately 17.6 million MMBTUs (extending through December 2019) were outstanding.

The following tables summarize information regarding Nucor’s derivative instruments (in thousands):

Fair Value of Derivative Instruments


		Fair Value at
	Balance Sheet Location	July 1, 2017			Dec. 31, 2016
Asset derivatives designated as hedging instruments:
Commodity contracts	Other current assets	$	200		$	1,250

Asset derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current assets		—			779

Total asset derivatives		$	200		$	2,029

Liability derivatives designated as hedging instruments:
Commodity contracts	Deferred credits and other liabilities	$	(700	)	$	—

Liability derivatives not designated as hedging instruments:
Commodity contracts	Accrued expenses and other current liabilities		(658	)		(605	)
Foreign exchange contracts	Accrued expenses and other current liabilities		(1,232	)		—

Total liability derivatives not designated as hedging instruments			(1,890	)		(605	)

Total liability derivatives		$	(2,590	)	$	(605	)

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings

Derivatives Designated as Hedging Instruments

Amount of Gain or (Loss), net of

tax, Reclassified from

Amount of Gain or (Loss), net of

Derivatives in

tax, Recognized in OCI on

Accumulated OCI into Earnings on

tax, Recognized in Earnings on

Cash Flow

Statement of

Derivatives (Effective Portion)

Derivatives (Ineffective Portion)

Hedging

Earnings

Three Months (13 Weeks) Ended

Relationships

Location

July 1, 2017

July 2, 2016

July 1, 2017

July 2, 2016

July 1, 2017

July 2, 2016

Commodity contracts

Cost of
products
sold

(71

)

3,243

(171

)

(3,257

)

—

Derivatives in

Cash Flow

Statement of

Amount of Gain or (Loss), net of
tax, Recognized in OCI on
Derivatives (Effective Portion)

Amount of Gain or (Loss), net of
tax, Reclassified from
Accumulated OCI into Earnings on
Derivatives (Effective Portion)

Amount of Gain or (Loss), net of
tax, Recognized in Earnings on
Derivatives (Ineffective Portion)

Hedging

Earnings

Six Months (26 Weeks) Ended

Relationships

Location

July 1, 2017

July 2, 2016

July 1, 2017

July 2, 2016

July 1, 2017

July 2, 2016

Commodity contracts

Cost of
products
sold

(1,706

)

1,512

(656

)

(6,288

)

—

Derivatives Not Designated as Hedging Instruments

Amount of Gain or (Loss) Recognized in Earnings on Derivatives

Derivatives Not Designated as

Statement of

Three Months (13 Weeks) Ended

Six Months (26 Weeks) Ended

Hedging Instruments

Earnings Location

July 1, 2017

July 2, 2016

July 1, 2017

July 2, 2016

Commodity contracts

Cost of products sold

(364

)

(962

)

(2,919

)

(874

)

Foreign exchange contracts

Cost of products sold

(1,449

)

(13

)

(2,345

)

(831

)

Total

(1,813

)

(975

)

(5,264

)

(1,705

)