Derivatives and Other Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2016

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, 2016*		Unobservable input	Range ($ in full amounts)
Assets:
Embedded aluminum derivatives	$	931	Price of aluminum beyond forward curve	Aluminum: $2,027 per metric ton in 2026 to $2,192 per metric ton in 2029 (two contracts) and $2,489 per metric ton in 2036 (one contract) Midwest premium: $0.084 per pound in 2021 to $0.084 per pound in 2029 (two contracts) and 2036 (one contract)
Embedded aluminum derivative		48	Interrelationship of future aluminum prices, foreign currency exchange rates, and the U.S. consumer price index (CPI)	Aluminum: $1,487 per metric ton in April 2016 to $1,507 per metric ton in September 2016 Foreign currency: A$1 = $0.77 in 2016 (April through September) CPI: 1982 base year of 100 and 232 in April 2016 to 234 in September 2016
Embedded aluminum derivative		9	Interrelationship of LME price to overall energy price	Aluminum: $1,518 per metric ton in 2016 to $1,681 per metric ton in 2019
Embedded aluminum derivative		–	Interrelationship of future aluminum and oil prices	Aluminum: $1,487 per metric ton in 2016 to $1,615 per metric ton in 2018 Oil: $39 per barrel in 2016 to $49 per barrel in 2018
Liabilities:
Embedded aluminum derivative		161	Price of aluminum beyond forward curve	Aluminum: $2,027 per metric ton in 2026 to $2,084 per metric ton in 2027
Embedded credit derivative		33	Credit spread between Alcoa and counterparty	3.17% to 4.00% (3.58% median)
Energy contract		5	Price of electricity beyond forward curve	Electricity: $47 per megawatt hour in 2019 to $115 per megawatt hour in 2036

* The fair value of the energy contract reflected as a liability in this table is lower by $6 compared to the respective amount reflected in the Level 3 tables presented below. This is due to the fact that this contract is in a liability position for the current portion but is in an asset position for the noncurrent portion, and is reflected as such on the accompanying Consolidated Balance Sheet. However, this derivative is reflected as a net liability in the above table for purposes of presenting the assumptions utilized to measure the fair value of the derivative instrument in its 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	March 31, 2016		December 31, 2015
Derivatives designated as hedging instruments:
Prepaid expenses and other current assets:
Embedded aluminum derivatives	$	72	$	72
Other noncurrent assets:
Embedded aluminum derivatives		868		994
Energy contract		6		2
Total derivatives designated as hedging instruments	$	946	$	1,068
Derivatives not designated as hedging instruments:
Prepaid expenses and other current assets:
Embedded aluminum derivatives	$	48	$	69
Total derivatives not designated as hedging instruments	$	48	$	69
Total Asset Derivatives	$	994	$	1,137
Liability Derivatives
Derivatives designated as hedging instruments:
Other current liabilities:
Embedded aluminum derivatives	$	8	$	9
Energy contract		11		4
Other noncurrent liabilities and deferred credits:
Embedded aluminum derivatives		153		160
Total derivatives designated as hedging instruments	$	172	$	173
Derivatives not designated as hedging instruments:
Other current liabilities:
Embedded credit derivative	$	5	$	6
Other noncurrent liabilities and deferred credits:
Embedded credit derivative		28		29
Total derivatives not designated as hedging instruments	$	33	$	35
Total Liability Derivatives	$	205	$	208

Schedule of Reconciliation of Activity for Derivative Contracts

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

	Assets					Liabilities
First quarter ended March 31, 2016	Embedded aluminum derivatives			Energy contract		Embedded aluminum derivatives			Embedded credit derivative			Energy contract
Opening balance – January 1, 2016	$	1,135		$	2	$	169		$	35		$	4
Total gains or losses (realized and unrealized) included in:
Sales		(7	)		–		(2	)		–			–
Cost of goods sold		(31	)		–		–			(1	)		–
Other expenses (income), net		(4	)		2		–			(1	)		(1	)
Other comprehensive income (loss)		(121	)		2		(6	)		–			8

	Assets					Liabilities
First quarter ended March 31, 2016	Embedded aluminum derivatives			Energy contract		Embedded aluminum derivatives		Embedded credit derivative			Energy contract
Purchases, sales, issuances, and settlements*		—			—		—		—			—
Transfers into and/or out of Level 3*		—			—		—		—			—
Foreign currency translation		16			—		—		—			—
Closing balance – March 31, 2016	$	988		$	6	$	161	$	33		$	11
Change in unrealized gains or losses included in earnings for derivative contracts held at March 31, 2016:
Sales	$	—		$	—	$	—	$	—		$	—
Cost of goods sold		—			—		—		—			—
Other expenses (income), net		(4	)		2		—		(1	)		(1	)

* 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, 2016				December 31, 2015
	Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	1,384	$	1,384	$	1,919	$	1,919
Restricted cash		33		33		37		37
Noncurrent receivables		19		19		17		17
Available-for-sale securities		177		177		193		193
Short-term borrowings		40		40		38		38
Commercial paper		—		—		—		—
Long-term debt due within one year		772		772		21		21
Contingent payment related to an acquisition		131		131		130		130
Long-term debt, less amount due within one year		8,257		8,330		8,993		8,922