Derivatives and Other Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2014

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 December 31, 2014		Unobservable input	Range ($ in full amounts)
Assets:
Embedded aluminum derivative	$	168	Interrelationship of future aluminum prices, foreign currency exchange rates, and the U.S. consumer price index (CPI)	Aluminum: $1,841 per metric ton in 2015 to $1,923 per metric ton in 2016 Foreign currency: A$1 = $0.82 in 2015 to $0.83 in 2016 CPI: 1982 base year of 100 and 233 in 2015 to 242 in 2016
Embedded aluminum derivatives		77	Price of aluminum beyond forward curve	Aluminum: $2,332 per metric ton in 2025 to $2,558 per metric ton in 2029 Midwest premium: $0.2315 per pound in 2020 to $0.2315 per pound in 2029 (two contracts) and 2036 (one contract)
Embedded aluminum derivative		1	Interrelationship of LME price to overall energy price	Aluminum: $1,910 per metric ton in 2015 to $2,040 per metric ton in 2019
Embedded aluminum derivative		1	Interrelationship of future aluminum and oil prices	Aluminum: $1,841 per metric ton in 2015 to $2,012 per metric ton in 2018 Oil: $58 per barrel in 2015 to $76 per barrel in 2018
Energy contract		2	Price of electricity beyond forward curve	Electricity: $43 per megawatt hour in 2018 to $130 per megawatt hour in 2036
Liabilities:
Embedded aluminum derivative		357	Price of aluminum beyond forward curve	Aluminum: $2,332 per metric ton in 2025 to $2,449 per metric ton in 2027
Embedded credit derivative		18	Credit spread between Alcoa and counterparty	1.35% to 1.85% (1.60% median)

The fair value of embedded aluminum derivatives reflected as assets and liabilities in this table are both lower by $19 compared to the respective amounts reflected in the Level 3 tables presented below. This is due to the fact that Alcoa has two 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 asset 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:


Asset Derivatives	December 31, 2014		December 31, 2013
Derivatives designated as hedging instruments:
Prepaid expenses and other current assets:
Embedded aluminum derivatives	$	24	$	9
Other noncurrent assets:
Embedded aluminum derivative		73		16
Energy contract		2		6
Total derivatives designated as hedging instruments	$	99	$	31
Derivatives not designated as hedging instruments*:
Prepaid expenses and other current assets:
Embedded aluminum derivatives	$	98	$	149
Other noncurrent assets:
Embedded aluminum derivatives		71		175
Total derivatives not designated as hedging instruments	$	169	$	324
Total Asset Derivatives	$	268	$	355

Liability Derivatives
Derivatives designated as hedging instruments:
Other current liabilities:
Embedded aluminum derivative	$	24	$	23
Other noncurrent liabilities and deferred credits:
Embedded aluminum derivatives		352		387
Total derivatives designated as hedging instruments	$	376	$	410
Derivatives not designated as hedging instruments*:
Other current liabilities:
Embedded credit derivative	$	2	$	2
Other noncurrent liabilities and deferred credits:
Embedded credit derivative		16		19
Total derivatives not designated as hedging instruments	$	18	$	21
Total Liability Derivatives	$	394	$	431

*	See the “Other” section within Note X for additional information on Alcoa’s purpose for entering into derivatives not designated as hedging instruments and its overall risk management strategies.

Schedule of Net Fair Values of Level 3 Derivative Instruments and Effect of Hypothetical Change (Increase or Decrease of 10%) in Market Prices or Rates

The following table shows the net fair values of the Level 3 derivative instruments at December 31, 2014 and the effect on these amounts of a hypothetical change (increase or decrease of 10%) in the market prices or rates that existed as of December 31, 2014:


	Fair value asset/(liability)			Index change of + / - 10%
Embedded aluminum derivatives	$	(110	)	$	413
Embedded credit derivative		(18	)		2
Energy contract		2			180

Schedule of Reconciliation of Activity for Derivative Contracts

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


	Assets						Liabilities
2014	Embedded aluminum derivatives			Energy contract			Embedded aluminum derivatives			Embedded credit derivative
Opening balance—January 1, 2014	$	349		$	6		$	410		$	21
Total gains or losses (realized and unrealized) included in:
Sales		(1	)		-			(27	)		-
Cost of goods sold		(163	)		-			-			(1	)
Other expenses, net		(15	)		-			-			(2	)
Other comprehensive loss		71			(4	)		(7	)		-
Purchases, sales, issuances, and settlements*		-			-			-			-
Transfers into and/or out of Level 3*		-			-			-			-
Foreign currency translation		23			-			-			-
Closing balance—December 31, 2014	$	266		$	2		$	376		$	18
Change in unrealized gains or losses included in earnings for derivative contracts held at December 31, 2014:
Sales	$	-		$	-		$	-		$	-
Cost of goods sold		-			-			-			-
Other expenses, net		(15	)		-			-			(2	)

In November 2014, three new embedded derivatives were contained within renewed power contracts; however, there was no amount included for issuances as the fair value on the date of issuance was zero. There were no purchases, sales or settlements of Level 3 derivative instruments. Additionally, there were no transfers of derivative instruments into or out of Level 3.


	Assets					Liabilities
2013	Embedded aluminum derivatives			Energy contract		Embedded aluminum derivatives			Embedded credit derivative
Opening balance—January 1, 2013	$	547		$	3	$	608		$	30
Total gains or losses (realized and unrealized) included in:
Sales		2			-		(25	)		-
Cost of goods sold		(202	)		-		-			(1	)
Other income, net		28			-		-			(8	)
Other comprehensive loss		17			3		(173	)		-
Purchases, sales, issuances, and settlements*		-			-		-			-
Transfers into and/or out of Level 3*		-			-		-			-
Foreign currency translation		(43	)		-		-			-
Closing balance—December 31, 2013	$	349		$	6	$	410		$	21
Change in unrealized gains or losses included in earnings for derivative contracts held at December 31, 2013:
Sales	$	-		$	-	$	-		$	-
Cost of goods sold		-			-		-			-
Other income, net		28			-		-			(8	)

*	In 2013, 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:


December 31,	2014				2013
December 31,	Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	1,877	$	1,877	$	1,437	$	1,437
Restricted cash		20		20		18		18
Noncurrent receivables		17		17		19		19
Available-for-sale securities		153		153		119		119
Short-term borrowings		54		54		57		57
Commercial paper		-		-		-		-
Long-term debt due within one year		29		29		655		1,040
Long-term debt, less amount due within one year		8,769		9,445		7,607		7,863