Derivatives and Other Financial Instruments (Tables)

9 Months Ended

Sep. 30, 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 September 30, 2015		Unobservable input	Range ($ in full amounts)
Assets:
Embedded aluminum derivatives	$	784	Price of aluminum beyond forward curve	Aluminum: $2,160 per metric ton in 2026 to $2,347 per metric ton in 2029 (two contracts) and $2,643 per metric ton in 2036 (one contract) Midwest premium: $0.0795 per pound in 2021 to $0.0795 per pound in 2029 (two contracts) and 2036 (one contract)
Embedded aluminum derivative		87	Interrelationship of future aluminum prices, foreign currency exchange rates, and the U.S. consumer price index (CPI)	Aluminum: $1,562 per metric ton in 2015 to $1,615 per metric ton in 2016 Foreign currency: A$1 = $0.70 in 2015 to $0.70 in 2016 CPI: 1982 base year of 100 and 235 in 2015 to 239 in 2016
Embedded aluminum derivative		4	Interrelationship of LME price to overall energy price	Aluminum: $1,560 per metric ton in 2015 to $1,817 per metric ton in 2019
Embedded aluminum derivative		—	Interrelationship of future aluminum and oil prices	Aluminum: $1,562 per metric ton in 2015 to $1,762 per metric ton in 2018 Oil: $47 per barrel in 2015 to $60 per barrel in 2018
Liabilities:
Embedded aluminum derivative		223	Price of aluminum beyond forward curve	Aluminum: $2,160 per metric ton in 2026 to $2,239 per metric ton in 2027
Embedded credit derivative		32	Credit spread between Alcoa and counterparty	3.04% to 3.50% (3.27% median)
Energy contract		5	Price of electricity beyond forward curve	Electricity: $45 per megawatt hour in 2018 to $121 per megawatt hour in 2036

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:


	September 30, 2015		December 31, 2014
Asset Derivatives
Derivatives designated as hedging instruments:
Prepaid expenses and other current assets:
Embedded aluminum derivatives	$	70	$	24
Other noncurrent assets:
Embedded aluminum derivative		718		73
Energy contract		—		2

Total derivatives designated as hedging instruments	$	788	$	99


Derivatives not designated as hedging instruments:
Prepaid expenses and other current assets:
Embedded aluminum derivatives	$	87	$	98
Other noncurrent assets:
Embedded aluminum derivatives		—		71

Total derivatives not designated as hedging instruments	$	87	$	169


Total Asset Derivatives	$	875	$	268


Liability Derivatives
Derivatives designated as hedging instruments:
Other current liabilities:
Embedded aluminum derivative	$	11	$	24
Other noncurrent liabilities and deferred credits:
Embedded aluminum derivatives		213		352
Energy contract		4		—

Total derivatives designated as hedging instruments	$	228	$	376


Derivatives not designated as hedging instruments:
Other current liabilities:
Embedded credit derivative	$	4	$	2
Other noncurrent liabilities and deferred credits:
Embedded credit derivative		28		16

Total derivatives not designated as hedging instruments	$	32	$	18


Total Liability Derivatives	$	260	$	394

Schedule of Reconciliation of Activity for Derivative Contracts

The following tables present a reconciliation of activity for Level 3 derivative contracts:


	Assets					Liabilities
Third quarter ended September 30, 2015	Embedded aluminum derivatives			Energy contract		Embedded aluminum derivatives			Embedded credit derivative		Energy contract
Opening balance – July 1, 2015	$	680		$	—	$	298		$	19	$	9
Total gains or losses (realized and unrealized) included in:
Sales		(2	)		—		(3	)		—		—
Cost of goods sold		(25	)		—		—			—		—
Other income, net		(4	)		—		—			13		—
Other comprehensive loss		229			—		(72	)		—		(5	)
Purchases, sales, issuances, and settlements*		—			—		—			—		—
Transfers into and/or out of Level 3*		—			—		—			—		—
Foreign currency translation		(3	)		—		—			—		1

Closing balance – September 30, 2015	$	875		$	—	$	223		$	32	$	5


Change in unrealized gains or losses included in earnings for derivative contracts held at September 30, 2015:
Sales	$	—		$	—	$	—		$	—	$	—
Cost of goods sold		—			—		—			—		—
Other income, net		(4	)		—		—			13		—

*	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.


	Assets						Liabilities
Nine months ended September 30, 2015	Embedded aluminum derivatives			Energy contract			Embedded aluminum derivatives			Embedded credit derivative		Energy contract
Opening balance – January 1, 2015	$	266		$	2		$	376		$	18	$	—
Total gains or losses (realized and unrealized) included in:
Sales		11			—			(14	)		—		—
Cost of goods sold		(70	)		—			—			—		—
Other income, net		(5	)		—			—			14		—
Other comprehensive loss		680			(2	)		(139	)		—		4
Purchases, sales, issuances, and settlements*		—			—			—			—		—
Transfers into and/or out of Level 3*		—			—			—			—		—
Foreign currency translation		(7	)		—			—			—		1

Closing balance – September 30, 2015	$	875		$	—		$	223		$	32	$	5


Change in unrealized gains or losses included in earnings for derivative contracts held at September 30, 2015:
Sales	$	—		$	—		$	—		$	—	$	—
Cost of goods sold		—			—			—			—		—
Other income, net		(5	)		—			—			14		—

*	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:


	September 30, 2015				December 31, 2014
	Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	1,739	$	1,739	$	1,877	$	1,877
Restricted cash		24		24		20		20
Noncurrent receivables		17		17		17		17
Available-for-sale securities		177		177		153		153
Short-term borrowings		50		50		54		54
Commercial paper		—		—		—		—
Long-term debt due within one year		136		136		29		29
Long-term debt, less amount due within one year		9,091		9,062		8,769		9,445