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Derivatives and Other Financial Instruments (Tables) | 3 Months Ended
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Mar. 31, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Schedule of Quantitative Information for Level 3 Derivative Contracts | The following table presents quantitative information related to the significant unobservable inputs described above for Level 3 derivative contracts:
|  | Fair value at March 31, 2015* |  |  | Unobservable input |  | Range ($ in full amounts)
Assets: |  |  |  |  |  |  |  |
Embedded aluminum derivative |  | $ | 140 |  |  | Interrelationship of future aluminum prices, foreign currency exchange rates, and the U.S. consumer price index (CPI) |  | Aluminum: $1,798 per metric ton in 2015 to $1,869 per metric ton in 2016 Foreign currency: A$1 = $0.77 in 2015 to $0.78 in 2016 CPI: 1982 base year of 100 and 231 in 2015 to 239 in 2016
Embedded aluminum derivative |  |  | — |  |  | Interrelationship of future aluminum and oil prices |  | Aluminum: $1,798 per metric ton in 2015 to $1,983 per metric ton in 2018 Oil: $56 per barrel in 2015 to $71 per barrel in 2018
Energy contract |  |  | 8 |  |  | Price of electricity beyond forward curve |  | Electricity: $43 per megawatt hour in 2018 to $130 per megawatt hour in 2036
Liabilities: |  |  |  |  |  |  |  |
Embedded aluminum derivative |  |  | 344 |  |  | Price of aluminum beyond forward curve |  | Aluminum: $2,320 per metric ton in 2025 to $2,425 per metric ton in 2027
Embedded aluminum derivative |  |  | 16 |  |  | Interrelationship of LME price to overall energy price |  | Aluminum: $1,830 per metric ton in 2015 to $2,003 per metric ton in 2019
Embedded aluminum derivatives |  |  | 4 |  |  | Price of aluminum beyond forward curve |  | Aluminum: $2,320 per metric ton in 2025 to $2,533 per metric ton in 2029 (two contracts) and $2,870 per metric ton in 2036 (one contract) Midwest premium: $0.1725 per pound in 2020 to $0.1725 per pound in 2029 (two contracts) and 2036 (one contract)
Embedded credit derivative |  |  | 16 |  |  | Credit spread between Alcoa and counterparty |  | 1.17% to 1.70% (1.44% median)
* | The fair value of embedded aluminum derivatives reflected as assets and liabilities in this table are both lower by $61 compared to the respective amounts reflected in the Level 3 table presented below. This is due to the fact that Alcoa has four derivatives that are in an asset position for the current portion but are in a liability position for the noncurrent portion, and are reflected as such on the accompanying Consolidated Balance Sheet. However, these derivatives are reflected as a net liability in this table for purposes of presenting the assumptions utilized to measure the fair value of the derivative instruments in their entirety.
Schedule of Fair Values of Level 3 Derivative Instruments Recorded as Assets and Liabilities | The fair values of Level 3 derivative instruments recorded as assets and liabilities in the accompanying Consolidated Balance Sheet were as follows:
|  | March 31, 2015 |  |  | December 31, 2014 |
Asset Derivatives |  |  |  |  |  |  |  |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |
Prepaid expenses and other current assets: |  |  |  |  |  |  |  |
Embedded aluminum derivatives |  | $ | 29 |  |  | $ | 24 |
Other noncurrent assets: |  |  |  |  |  |  |  |
Embedded aluminum derivative |  |  | 32 |  |  |  | 73 |
Energy contract |  |  | 8 |  |  |  | 2 |
Total derivatives designated as hedging instruments |  | $ | 69 |  |  | $ | 99 |
Derivatives not designated as hedging instruments*: |  |  |  |  |  |  |  |
Prepaid expenses and other current assets: |  |  |  |  |  |  |  |
Embedded aluminum derivatives |  | $ | 94 |  |  | $ | 98 |
Other noncurrent assets: |  |  |  |  |  |  |  |
Embedded aluminum derivatives |  |  | 46 |  |  |  | 71 |
Total derivatives not designated as hedging instruments |  | $ | 140 |  |  | $ | 169 |
Total Asset Derivatives |  | $ | 209 |  |  | $ | 268 |
Liability Derivatives |  |  |  |  |  |  |  |
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |
Other current liabilities: |  |  |  |  |  |  |  |
Embedded aluminum derivative |  | $ | 22 |  |  | $ | 24 |
Other noncurrent liabilities and deferred credits: |  |  |  |  |  |  |  |
Embedded aluminum derivatives |  |  | 403 |  |  |  | 352 |
Total derivatives designated as hedging instruments |  | $ | 425 |  |  | $ | 376 |
Derivatives not designated as hedging instruments*: |  |  |  |  |  |  |  |
Other current liabilities: |  |  |  |  |  |  |  |
Embedded credit derivative |  | $ | 2 |  |  | $ | 2 |
Other noncurrent liabilities and deferred credits: |  |  |  |  |  |  |  |
Embedded credit derivative |  |  | 14 |  |  |  | 16 |
Total derivatives not designated as hedging instruments |  | $ | 16 |  |  | $ | 18 |
Total Liability Derivatives |  | $ | 441 |  |  | $ | 394 |
* | See the “Other” section within Note N for additional information on Alcoa’s purpose for entering into derivatives not designated as hedging instruments and its overall risk management strategies.
Schedule of Reconciliation of Activity for Derivative Contracts | The following table presents a reconciliation of activity for Level 3 derivative contracts:
|  | Assets |  |  | Liabilities |
First quarter ended March 31, 2015 |  | Embedded Aluminum derivatives |  |  | Energy contract |  |  | Embedded Aluminum derivatives |  |  | Embedded credit derivative |
Opening balance – January 1, 2015 |  | $ | 266 |  |  | $ | 2 |  |  | $ | 376 |  |  | $ | 18 |
Total gains or losses (realized and unrealized) included in: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales |  |  | 6 |  |  |  | — |  |  |  | (6 | ) |  |  | — |
Cost of goods sold |  |  | (21 | ) |  |  | — |  |  |  | — |  |  |  | — |
Other income, net |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | (2 | )
Other comprehensive loss |  |  | (43 | ) |  |  | 6 |  |  |  | 55 |  |  |  | — |
Purchases, sales, issuances, and settlements* |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Transfers into and/or out of Level 3* |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign currency translation |  |  | (8 | ) |  |  | — |  |  |  | — |  |  |  | — |
Closing balance – March 31, 2015 |  | $ | 201 |  |  | $ | 8 |  |  | $ | 425 |  |  | $ | 16 |
Change in unrealized gains or losses included in earnings for derivative contracts held at March 31, 2015: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Cost of goods sold |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other income, net |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | (2 | )
* | There were no purchases, sales, issuances or settlements of Level 3 derivative instruments. Additionally, there were no transfers of derivative instruments into or out of Level 3.
Schedule of Carrying Values and Fair Values of Other Financial Instruments | The carrying values and fair values of Alcoa’s other financial instruments were as follows:
|  | March 31, 2015 |  |  | December 31, 2014 |
|  | Carrying value |  |  | Fair value |  |  | Carrying value |  |  | Fair value |
Cash and cash equivalents |  | $ | 1,191 |  |  | $ | 1,191 |  |  | $ | 1,877 |  |  | $ | 1,877 |
Restricted cash |  |  | 23 |  |  |  | 23 |  |  |  | 20 |  |  |  | 20 |
Noncurrent receivables |  |  | 17 |  |  |  | 17 |  |  |  | 17 |  |  |  | 17 |
Available-for-sale securities |  |  | 156 |  |  |  | 156 |  |  |  | 153 |  |  |  | 153 |
Short-term borrowings |  |  | 80 |  |  |  | 80 |  |  |  | 54 |  |  |  | 54 |
Commercial paper |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Long-term debt due within one year |  |  | 26 |  |  |  | 26 |  |  |  | 29 |  |  |  | 29 |
Long-term debt, less amount due within one year |  |  | 8,711 |  |  |  | 9,452 |  |  |  | 8,769 |  |  |  | 9,445 |

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