Annual report [Section 13 and 15(d), not S-K Item 405]

DERIVATIVE INSTRUMENTS AND HEDGING

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DERIVATIVE INSTRUMENTS AND HEDGING
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging
NOTE 15 - DERIVATIVE INSTRUMENTS AND HEDGING
We are exposed to price risk associated with fluctuations in the market prices of purchased raw materials and energy sources and the sales price of certain steel products. We may use cash-settled commodity purchase swaps to hedge the market risk associated with the purchase of certain of our raw materials and energy requirements and cash-settled sales swaps to hedge the sales price risk of certain steel products. Our hedging strategy is to reduce the effect on earnings from the price volatility of these various exposures.
Our commodity purchase swaps and sales swaps are designated as cash flow hedges for accounting purposes, and we record the gains and losses for the derivatives in Accumulated other comprehensive income until we reclassify them into Cost of goods sold when we recognize the associated underlying operating costs or Revenues when we recognize the associated underlying sale. Impacts of our designated commodity purchase swaps and sales swaps are reflected within Other, net in the Statements of Consolidated Cash Flows. Refer to NOTE 17 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) for further information.
Our commodity purchase swaps are classified as Level 2 as values were determined using a market approach based upon quoted prices for similar assets in active markets or other inputs that were observable.
The following table presents the notional amount of our outstanding commodity purchase swaps:
Notional Amount
December 31,
Hedge Contract Type Classification Unit of Measure Hedged Periods 2025 2024
Natural Gas Commodity purchase swaps MMBtu January 2026 - December 2028 139,300,000 143,250,000
Electricity Commodity purchase swaps Megawatt hours January 2026 - June 2028 1,974,380 3,224,227
HRC Sales swaps Net tons January 2026 - December 2026 220,220 —
As of December 31, 2025, we estimate $19 million of net losses related to our commodity purchase swaps and $7 million of net losses related to our sales swaps will be reclassified from Accumulated other comprehensive income into Cost of goods sold and Revenues, respectively, during the next 12 months. These estimates are based on December 31, 2025 fair values, some of which will change before their actual reclassification into Cost of goods sold and Revenues.
The following table presents the fair value of our cash flow hedges and the classification on the Statements of Consolidated Financial Position:
December 31,
Balance Sheet Location (In millions) 2025 2024
Other current assets $ 7  $ 5 
Other non-current assets 10  9 
Other current liabilities (24) (41)
Other non-current liabilities (2) (6)
FOREIGN CURRENCY CONTRACTS
On July 15, 2024, we announced that we had entered into the Arrangement Agreement with Stelco Holdings Inc. to acquire all of its common shares in a cash and stock transaction. We hedged a portion of the purchase price by entering into multiple foreign currency contracts. These hedge contracts were considered economic hedges and did not qualify for hedge accounting. During
the year ended December 31, 2024, these contracts resulted in a loss of $29 million presented in Other non-operating income in the Statements of Consolidated Operations and in Other investing activities in the Statements of Consolidated Cash Flows. As of, and during the year ended, December 31, 2025, no foreign currency contracts were outstanding.