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Derivative Financial Instruments and Related Hedging Programs (Tables) | 12 Months Ended
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Dec. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Summary of material derivative positions | The following table summarizes the notional amounts of our material derivative positions at December 31, 2016:
Aluminum |  | Maturity Period (month/year) |  | Notional Amount of Contracts (mmlbs)
Fixed price purchase contracts |  | 1/17 through 12/19 |  | 149.0 |
Fixed price sales contracts |  | 1/17 through 1/17 |  | 0.4 |
Midwest premium swap contracts 1 |  | 1/17 through 12/19 |  | 147.9 |
Alloying Metals |  | Maturity Period (month/year) |  | Notional Amount of Contracts (mmlbs)
Fixed price purchase contracts |  | 1/17 through 12/17 |  | 4.0 |
Natural Gas 2 |  | Maturity Period (month/year) |  | Notional Amount of Contracts (mmbtu)
Fixed price purchase contracts |  | 1/17 through 12/19 |  | 5,040,000 |
Euro |  | Maturity Period (month/year) |  | Notional Amount of contracts (euro)
Fixed price purchase contracts |  | 1/17 through 8/17 |  | 1,593,700 |
Fixed price sales contracts |  | 1/17 through 1/17 |  | 633,600 |
_________________________
1. | Regional premiums represent the premium over the London Metal Exchange price for primary aluminum which is incurred on our purchases of primary aluminum.
2. | As of December 31, 2016, we had derivative and/or physical delivery commitments with energy companies in place to cover exposure to fluctuations in prices for approximately 73%, 72% and 49% of the expected natural gas purchases for 2017, 2018 and 2019, respectively.
Summary of realized and unrealized gains and losses | Realized and unrealized gain (loss) associated with all derivative contracts consisted of the following for each period presented (in millions of dollars):
|  | Year Ended December 31,
|  | 2016 |  | 2015 |  | 2014
Included in Other Comprehensive Income (Loss): |  |  |  |  |  |
Unrealized gain (loss): |  |  |  |  |  |
Foreign currency cash flow hedge |  | $ | — |  |  | $ | (0.3 | ) |  | $ | — |
Alloy Hedges |  | (0.1 | ) |  | — |  |  | — |
Included in Statement of Consolidated Income (Loss): |  |  |  |  |  |
Realized (loss) gain: |  |  |  |  |  |  |
Aluminum |  | (2.0 | ) |  | (27.3 | ) |  | 6.9 |
Natural gas |  | (5.0 | ) |  | (5.4 | ) |  | 1.0 |
Foreign currency |  | (0.1 | ) |  | — |  |  | — |
Electricity |  | — |  |  | (1.9 | ) |  | (0.1 | )
Total realized (loss) gain 1: |  | $ | (7.1 | ) |  | $ | (34.6 | ) |  | $ | 7.8 |
Unrealized gain (loss): |  |  |  |  |  |
Aluminum |  | $ | 10.8 |  |  | $ | (4.6 | ) |  | $ | (2.6 | )
Natural gas |  | 7.9 |  |  | (0.5 | ) |  | (6.0 | )
Electricity |  | — |  |  | 1.7 |  |  | (1.8 | )
Subtotal 2 |  | 18.7 |  |  | (3.4 | ) |  | (10.4 | )
Hedges related to Convertible Notes: |  |  |  |  |  |
Option Assets |  | — |  |  | — |  |  | 5.2 |
Bifurcated Conversion Feature |  | — |  |  | — |  |  | (1.6 | )
Subtotal 3 |  | — |  |  | — |  |  | 3.6 |
Total unrealized gain (loss) |  | $ | 18.7 |  |  | $ | (3.4 | ) |  | $ | (6.8 | )
______________________
1. | Realized (loss) gain on hedges of operational risk are recorded within Cost of products sold, excluding depreciation, amortization and other items.
2. | Unrealized gain (loss) on hedges of operational risk are recorded within Unrealized gain (loss) on derivative instruments.
3. | Unrealized gain (loss) on financial derivatives related to the Convertible Notes, which settled in April 2015, were recorded within Other (expense) income, net.
Fair Value, Measurement Inputs, Disclosure | The following table presents our derivative assets and liabilities, classified under the appropriate level of the fair value hierarchy, as of the period presented (in millions of dollars):
| December 31, 2016
| Level 1 |  | Level 2 |  | Level 3 |  | Total
DERIVATIVE ASSETS: |  |  |  |  |  |  |
Non-Designated Hedges: |  |  |  |  |  |  |
Aluminum – Fixed price purchase contracts | $ | — |  |  | $ | 3.3 |  |  | $ | — |  |  | $ | 3.3 |
Natural gas – Fixed price purchase contracts | — |  |  | 1.6 |  |  | — |  |  | 1.6 |
Midwest premium swap contracts | — |  |  | 0.9 |  |  | — |  |  | 0.9 |
Total derivative assets | $ | — |  |  | $ | 5.8 |  |  | $ | — |  |  | $ | 5.8 |
DERIVATIVE LIABILITIES: |  |  |  |  |  |  |
Non-Designated Hedges: |  |  |  |  |  |  |
Aluminum – |  |  |  |  |  |  |
Fixed price purchase contracts | $ | — |  |  | $ | (1.1 | ) |  | $ | — |  |  | $ | (1.1 | )
Fixed price sales contracts | — |  |  | — |  |  | — |  |  | — |
Midwest premium swap contracts | — |  |  | (0.2 | ) |  | — |  |  | (0.2 | )
Natural gas – Fixed price purchase contracts | — |  |  | (0.4 | ) |  | — |  |  | (0.4 | )
Designated Hedges: |  |  |  |  |  |  |
Alloying metals – Fixed price purchase contracts | — |  |  | (0.1 | ) |  | — |  |  | (0.1 | )
Total derivative liabilities | $ | — |  |  | $ | (1.8 | ) |  | $ | — |  |  | $ | (1.8 | )
The following table presents our derivative assets and liabilities, classified under the appropriate level of the fair value hierarchy, as of the period presented (in millions of dollars):
| December 31, 2015
| Level 1 |  | Level 2 |  | Level 3 |  | Total
DERIVATIVE ASSETS: |  |  |  |  |  |  |
Non-Designated Hedges: |  |  |  |  |  |  |
Aluminum – |  |  |  |  |  |  |
Call option purchase contracts | $ | — |  |  | $ | 0.2 |  |  | $ | — |  |  | $ | 0.2 |
Fixed price purchase contracts | — |  |  | 0.3 |  |  | — |  |  | 0.3 |
Fixed price sales contracts | — |  |  | 0.2 |  |  | — |  |  | 0.2 |
Midwest premium swap contracts | — |  |  | — |  |  | 0.9 |  |  | 0.9 |
Total derivative assets | $ | — |  |  | $ | 0.7 |  |  | $ | 0.9 |  |  | $ | 1.6 |
DERIVATIVE LIABILITIES: |  |  |  |  |  |  |
Non-Designated Hedges: |  |  |  |  |  |  |
Aluminum – |  |  |  |  |  |  |
Fixed price purchase contracts | $ | — |  |  | $ | (8.9 | ) |  | $ | — |  |  | $ | (8.9 | )
Fixed price sales contracts | — |  |  | (0.1 | ) |  | — |  |  | (0.1 | )
Midwest premium swap contracts | — |  |  | — |  |  | (0.3 | ) |  | (0.3 | )
Natural gas – Fixed price purchase contracts | — |  |  | (6.7 | ) |  | — |  |  | (6.7 | )
Designated Hedges: |  |  |  |  |  |  |
Foreign currency – Euro forward purchase contracts | — |  |  | (0.2 | ) |  | — |  |  | (0.2 | )
Total derivative liabilities | $ | — |  |  | $ | (15.9 | ) |  | $ | (0.3 | ) |  | $ | (16.2 | )
Schedule of quantitative information for Level 3 Midwest premiums derivative contracts | The following table presents a reconciliation of activity for the Level 3 Midwest premium derivative contracts on a net basis (in millions of dollars):
| Year Ended December 31,
| 2016 |  | 2015
Fair value measurement at beginning of period | $ | 0.6 |  |  | $ | 1.0 |
Total realized/unrealized (loss) gain included in: |  |  |
Cost of goods sold, excluding depreciation and amortization and other items and Unrealized loss (gain) on derivative instruments | (0.6 | ) |  | (3.9 | )
Transactions involving Level 3 derivative contracts: |  |  |
Purchases | (1.2 | ) |  | (4.0 | )
Sales | — |  |  | — |
Issuances | — |  |  | — |
Settlements | 0.4 |  |  | 7.5 |
Transactions involving Level 3 derivatives - net | (0.8 | ) |  | 3.5 |
Transfers out of Level 3 valuation hierarchy 1 | 0.8 |  |  | — |
Fair value measurement at end of period | $ | — |  |  | $ | 0.6 |
Total loss included in Unrealized loss (gain) on derivative instruments, attributable to the change in unrealized gain/loss relating to derivative contracts held at December 31: | $ | — |  |  | $ | 0.6 |
Schedule of Offsetting Derivative Instruments by Counterparty | The following tables present offsetting information regarding our derivatives by type of counterparty as of December 31, 2016 (in millions of dollars):
| Gross Amounts of Recognized Assets |  | Gross Amounts Offset in the Consolidated Balance Sheets |  | Net Amounts of Assets Presented in the Consolidated Balance Sheets |  | Gross Amounts Not Offset in the Consolidated Balance Sheets |  |
|  |  |  |  | Net Amount
Counterparty (with netting agreements) | $ | 3.3 |  |  | $ | — |  |  | $ | 3.3 |  |  | $ | 1.0 |  |  | $ | 2.3 |
Counterparty (with partial netting agreements) | 2.5 |  |  | — |  |  | 2.5 |  |  | 0.7 |  |  | 1.8 |
Total | $ | 5.8 |  |  | $ | — |  |  | $ | 5.8 |  |  | $ | 1.7 |  |  | $ | 4.1 |
| Gross Amounts of Recognized Liabilities |  | Gross Amounts Offset in the Consolidated Balance Sheets |  | Net Amounts of Liabilities Presented in the Consolidated Balance Sheets |  | Gross Amounts Not Offset in the Consolidated Balance Sheets |  |
|  |  |  |  | Net Amount
Counterparty (with netting agreements) | $ | (1.0 | ) |  | $ | — |  |  | $ | (1.0 | ) |  | $ | (1.0 | ) |  | $ | — |
Counterparty (with partial netting agreements) | (0.8 | ) |  | — |  |  | (0.8 | ) |  | (0.7 | ) |  | (0.1 | )
Total | $ | (1.8 | ) |  | $ | — |  |  | $ | (1.8 | ) |  | $ | (1.7 | ) |  | $ | (0.1 | )
The following tables present offsetting information regarding our derivatives by type of counterparty as of December 31, 2015 (in millions of dollars):
| Gross Amounts of Recognized Assets |  | Gross Amounts Offset in the Consolidated Balance Sheets |  | Net Amounts of Assets Presented in the Consolidated Balance Sheets |  | Gross Amounts Not Offset in the Consolidated Balance Sheets |  |
|  |  |  |  | Net Amount
Counterparty (with netting agreements) | $ | 1.3 |  |  | $ | — |  |  | $ | 1.3 |  |  | $ | 1.3 |  |  | $ | — |
Counterparty (with partial netting agreements) | 0.3 |  |  | — |  |  | 0.3 |  |  | 0.3 |  |  | — |
Total | $ | 1.6 |  |  | $ | — |  |  | $ | 1.6 |  |  | $ | 1.6 |  |  | $ | — |
| Gross Amounts of Recognized Liabilities |  | Gross Amounts Offset in the Consolidated Balance Sheets |  | Net Amounts of Liabilities Presented in the Consolidated Balance Sheets |  | Gross Amounts Not Offset in the Consolidated Balance Sheets |  |
|  |  |  |  | Net Amount
Counterparty (with netting agreements) | $ | (8.5 | ) |  | $ | — |  |  | $ | (8.5 | ) |  | $ | (1.3 | ) |  | $ | (7.2 | )
Counterparty (with partial netting agreements) | (7.7 | ) |  | — |  |  | (7.7 | ) |  | (0.3 | ) |  | (7.4 | )
Total | $ | (16.2 | ) |  | $ | — |  |  | $ | (16.2 | ) |  | $ | (1.6 | ) |  | $ | (14.6 | )
Fair Value, Assets Measured on Recurring Basis | The following table presents our other financial assets, classified under the appropriate level of the fair value hierarchy, as of December 31, 2015 (in millions of dollars):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents | $ | 40.3 |  |  | $ | 32.2 |  |  | $ | — |  |  | $ | 72.5 |
Short-term investments | — |  |  | 30.0 |  |  | — |  |  | 30.0 |
Total | $ | 40.3 |  |  | $ | 62.2 |  |  | $ | — |  |  | $ | 102.5 |
The following table presents our other financial assets, classified under the appropriate level of the fair value hierarchy, as of December 31, 2016 (in millions of dollars):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents | $ | 37.9 |  |  | $ | 17.3 |  |  | $ | — |  |  | $ | 55.2 |
Short-term investments | — |  |  | 231.0 |  |  | — |  |  | 231.0 |
Total | $ | 37.9 |  |  | $ | 248.3 |  |  | $ | — |  |  | $ | 286.2 |

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