Quantitative and Qualitative Disclosures About Market Risk
−Removed: Our primary areas of market risk include changes in:
−Removed: (1) the price of coal, which is the key raw material for our cokemaking business;
−Removed: (2) interest rates;
−Removed: and (3) foreign currency exchange rates.
+Added: Our primary areas of market risk include the following:
+Added: (1) changes in the price of coal and coke in certain cases, as detailed below;
+Added: (2) changes in interest rates;
+Added: and (3) changes in foreign currency exchange rates.
We do not enter into any market risk sensitive instruments for trading purposes.
−Removed: Price of coal
+Added: Price of coal and coke
Although we have not previously done so, we may enter into derivative financial instruments from time to time in the future to economically manage our exposure related to these market risks.
−Removed: For our Domestic Coke segment, the largest component of the price of our coke is coal cost.
−Removed: However, under long-term, take-or-pay coke sales agreements at our Domestic Coke cokemaking facilities, coal costs are a pass-through component of the coke price, provided that we are able to realize certain targeted coal-to-coke yields.
−Removed: As such, when targeted coal-to-coke yields are achieved, the price of coal is not a significant determining factor in the profitability of these facilities.
−Removed: The coal component of the Jewell coke price has historically been fixed annually for each calendar year based on the weighted-average contract price of third-party coal purchases at our Haverhill facility applicable to Cliffs Steel coke sales.
−Removed: Beginning in 2022, Jewell coal purchases will be passed through at actual cost rather than at the price of Haverhill's coal, consistent with our other long-term, take-or-pay agreements.
−Removed: Additionally, we are subject to market risk for the price of coals used to produce any tonnage in excess of those tons contracted in our long-term, take-or-pay coke sales agreements, specifically as it relates to the export and foundry coke markets.
−Removed: Export coke sales are based on coal market pricing at the time of sale, and do not contain the same pass-through provisions as our long-term, take-or-pay agreements.
−Removed: Our foundry coke prices are largely set at the time we negotiate our coal purchases.
−Removed: The provisions of our coke sales agreements require us to meet minimum production levels and generally require us to secure replacement coke supplies at the prevailing market price if we do not meet contractual minimum volumes.
−Removed: Because market prices for coke are generally highly correlated to market prices for metallurgical coal, to the extent any of our facilities are unable to produce their contractual minimum volumes, we are subject to market risk related to the procurement of replacement supplies.
+Added: Coal is the key raw material for our cokemaking business and is the largest component of the cost of our coke.
+Added: Under our long-term, take-or-pay coke sales agreements at our Domestic Coke cokemaking facilities, coal costs are a pass-through component of the coke price, provided that we are able to realize certain targeted coal-to-coke yields.
+Added: As such, when targeted coal-to-coke yields are achieved, the price of coal is not a significant determining factor in the profitability of coke sold under our long-term, take-or-pay agreements, which comprise the vast majority of our sales volumes in our Domestic Coke segment.
+Added: Our long-term, take-or-pay agreements require us to meet minimum production levels and generally require us to provide replacement coke if we do not meet contractual minimum volumes.
+Added: To the extent any of our facilities are unable to produce their contractual minimum volumes, and we are unable to supply coke from one of our other facilities, we are subject to market risk related to the procurement of replacement supplies.
+Added: We are subject to market risk for the price of coals used to produce coke sold into the export coke market.
+Added: Export coke sales are typically based on coke market pricing at the time of sale, rather than the pass-through provisions in our long-term, take-or-pay agreements.
+Added: Generally over time, market prices for metallurgical coal and coke have been correlated.
+Added: We monitor the market for our coal purchases versus pricing in the coke market to optimize profitability in our export business.
+Added: However, we are exposed to market risk to the extent the coal and coke markets fall out of correlation.
+Added: Additionally, the timing of contracting our coal purchases versus the timing of contracting our coke sales may cause favorable or unfavorable differences between the prices at which we procure our coals and the market rates at which we are able to sell our coke into the export market.
+Added: We are also subject to market risk for the price of coal as it relates to the foundry coke sales.
+Added: However, our foundry coke prices are largely set at the time we negotiate our coal purchases and therefore we are less exposed to market risk as it relates to the volatility in the price of coal on our foundry coke sales.
Interest rates
1 unchanged sentence
During the years ended December 31, 2022 and 2021, the daily average outstanding balance on borrowings with variable interest rates was $105.8 million and $102.8 million, respectively.
−Removed: Assuming a 50 basis point change in LIBOR, interest expense would have been impacted by $0.5 million and $0.7 million in 2021 and 2020, respectively.
+Added: Assuming a 50 basis point change in LIBOR, interest expense would have been impacted by $0.5 million in both 2022 and 2021, respectively.
At December 31, 2022, we had outstanding borrowings with variable interest rates of $35.0 million under the Revolving Facility.
+Added: Subsequent to December 31, 2022, we amended the Revolving Facility to transition from a variable interest rate based on LIBOR to a variable interest rate based on the secured overnight financing rate ("SOFR").
+Added: The Company does not expect the transition from LIBOR to SOFR to have a material impact on its consolidated financial statements and disclosures.
+Added: Refer to Note 11 to our consolidated financial statements for further detail.
At December 31, 2022 and 2021, we had cash and cash equivalents of $90.0 million and $63.8 million, respectively, which accrue interest at various rates.
7 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.