Derivatives and Other Financial Instruments (Tables)

9 Months Ended

Sep. 30, 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 September 30, 2016		Unobservable input	Range ($ in full amounts)
Assets:
Embedded aluminum derivatives	$	306	Price of aluminum beyond forward curve	Aluminum: $2,197 per metric ton in 2027 to $2,337 per metric ton in 2029 (two contracts) and $2,633 per metric ton in 2036 (one contract) Midwest premium: $0.0630 per pound in 2016 to $0.0750 per pound in 2029 (two contracts) and 2036 (one contract)
Embedded aluminum derivative		4	Interrelationship of LME price to overall energy price	Aluminum: $1,680 per metric ton in 2016 to $1,802 per metric ton in 2019
Embedded aluminum derivative		—	Interrelationship of future aluminum and oil prices	Aluminum: $1,662 per metric ton in 2016 to $1,762 per metric ton in 2018 Oil: $49 per barrel in 2016 to $55 per barrel in 2018
Energy contract		7	Price of electricity beyond forward curve	Electricity: $57 per megawatt hour in 2016 to $58 per megawatt hour in 2017
Liabilities:
Embedded aluminum derivative		242	Price of aluminum beyond forward curve	Aluminum: $2,197 per metric ton in 2027 to $2,229 per metric ton in 2027
Embedded aluminum derivative		30	Interrelationship of LME price to the amount of megawatt hours of energy needed to produce the forecasted metric tons of aluminum	Aluminum: $1,662 per metric ton in 2016 to $1,785 per metric ton in 2019 Midwest premium: $0.0630 per pound in 2016 to $0.0750 per pound in 2019 Electricity: rate of 2 million megawatt hours per year
Embedded credit derivative		24	Credit spread between Arconic and counterparty	2.15% to 2.89% (2.52% median)

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, 2016		December 31, 2015
Asset Derivatives
Derivatives designated as hedging instruments:
Prepaid expenses and other current assets:
Embedded aluminum derivatives	$	40	$	72
Energy contract		7		—
Other noncurrent assets:
Embedded aluminum derivatives		270		994
Energy contract		—		2
Total derivatives designated as hedging instruments	$	317	$	1,068
Derivatives not designated as hedging instruments:
Prepaid expenses and other current assets:
Embedded aluminum derivatives	$	—	$	69
Total derivatives not designated as hedging instruments	$	—	$	69
Total Asset Derivatives	$	317	$	1,137
Liability Derivatives
Derivatives designated as hedging instruments:
Other current liabilities:
Embedded aluminum derivative	$	25	$	9
Energy contract		—		4
Other noncurrent liabilities and deferred credits:
Embedded aluminum derivative		247		160
Total derivatives designated as hedging instruments	$	272	$	173
Derivatives not designated as hedging instruments:
Other current liabilities:
Embedded credit derivative	$	4	$	6
Other noncurrent liabilities and deferred credits:
Embedded credit derivative		20		29
Total derivatives not designated as hedging instruments	$	24	$	35
Total Liability Derivatives	$	296	$	208

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, 2016	Embedded aluminum derivatives			Energy contract			Embedded aluminum derivative			Embedded credit derivative			Energy contract
Opening balance – July 1, 2016	$	745		$	49		$	228		$	33		$	9
Total gains or losses (realized and unrealized) included in:
Sales		1			—			(3	)		—			—
Cost of goods sold		(31	)		—			—			(1	)		—
Other income, net		(5	)		(85	)		2			(8	)		(1	)
Other comprehensive (loss) income		(414	)		48			48			—			(1	)
Purchases, sales, issuances, and settlements**		—			—			—			—			—
Transfers into and/or out of Level 3**		—			—			—			—			—
Other		14			(5	)		(3	)		—			(7	)
Closing balance – September 30, 2016	$	310		$	7		$	272		$	24		$	—
Change in unrealized gains or losses included in earnings for derivative contracts held at September 30, 2016:
Sales	$	—		$	—		$	—		$	—		$	—
Cost of goods sold		—			—			—			—			—
Other income, net*		(5	)		(85	)		2			(8	)		(1	)

* In August 2016, Arconic elected to terminate the energy contract in accordance with the provisions of the agreement (see above). As a result, Arconic decreased the derivative asset and recorded a charge in Other income of $84, which is reflected in the table above. Additionally, Arconic also decreased the related unrealized gain and recorded a benefit in Other income of $84. As such, the termination of most of the remaining term of this derivative contract did not have an impact on Arconic’s earnings.

** In the 2016 nine-month period, there was an issuance of a new embedded derivative contained in an amendment to an existing power contract. 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
Nine months ended September 30, 2016	Embedded aluminum derivatives			Energy contract			Embedded aluminum derivative			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		(9	)		—			(8	)		—			—
Cost of goods sold		(92	)		—			—			(4	)		—
Other income, net		(13	)		(83	)		2			(7	)		(2	)
Other comprehensive (loss) income		(750	)		87			80			—			(1	)
Purchases, sales, issuances, and settlements**		—			—			32			—			—
Transfers into and/or out of Level 3**		—			—			—			—			—
Other		39			1			(3	)		—			(1	)
Closing balance – September 30, 2016	$	310		$	7		$	272		$	24		$	—
Change in unrealized gains or losses included in earnings for derivative contracts held at September 30, 2016:
Sales	$	—		$	—		$	—		$	—		$	—
Cost of goods sold		—			—			—			—			—
Other income, net*		(13	)		(83	)		2			(7	)		(2	)

* In August 2016, Arconic elected to terminate the energy contract in accordance with the provisions of the agreement (see above). As a result, Arconic decreased the derivative asset and recorded a charge in Other income of $84, which is reflected in the table above. Additionally, Arconic also decreased the related unrealized gain and recorded a benefit in Other income of $84. As such, the termination of most of the remaining term of this derivative contract did not have an impact on Arconic’s earnings.

** In the 2016 third quarter, 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 Arconic’s other financial instruments were as follows:

	September 30, 2016				December 31, 2015
	Carrying value		Fair value		Carrying value		Fair value
Cash and cash equivalents	$	1,863	$	1,863	$	1,919	$	1,919
Restricted cash		1,337		1,337		37		37
Noncurrent receivables		19		19		17		17
Available-for-sale securities		83		83		193		193
Short-term borrowings		32		32		38		38
Commercial paper		—		—		—		—
Long-term debt due within one year		773		783		21		21
Contingent payment related to an acquisition		133		133		130		130
Long-term debt, less amount due within one year		9,501		10,195		8,993		8,922